Final Review 10 & 11

Final Review 10 & 11 - Ch 9 Foreign Exchange Market...

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Ch 9 Foreign Exchange Market room 832 - Law of one price – in competitive markets free of transportation costs and barriers of trade, identical products sold in different countries must be sold at same price in terms of currency. - CH10 International Monetary system - Gold Standard – The Act of Pegging currency to the value of Gold. In other words, it’s using gold as money o Contains a mechanism for achieving Balance of trade equilibrium by all countries o During World War 1, the gold standard was dropped because it led to people devaluing their own currency and put people out of jobs. - Bretton Woods System – Agreement led to the creation of the International Monetary Fund and the world bank. o World Bank (international bank for reconstruction and development) Role – Lending money to third world countries and lend heavy support to standard of living. o Fixed Exchange Rate (IMF) – All countries involved in this were required to peg their currency to the value of gold, however, they did not exchange their currency for
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This note was uploaded on 09/08/2010 for the course BUS 187 at San Jose State.

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Final Review 10 & 11 - Ch 9 Foreign Exchange Market...

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