griffin05_07 - the international monetary system and the...

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international business, 5 th edition c hapter 7 the international monetary system and the balance of payments
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7-2 Chapter Objectives 1 Discuss the role of the international monetary system in promoting international trade and investment Explain the evolution and functioning of the gold standard Summarize the role of the World Bank Group and the International Monetary Fund in the post-World War II international monetary system established at Bretton Woods
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7-3 Chapter Objectives 2 Explain the evolution of the flexible exchange rate system Describe the function and structure of the balance of payments accounting system Differentiate among the various definitions of a balance of payments surplus and deficit
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7-4 International Monetary System The international monetary system establishes the rules by which countries value and exchange their currencies and provides a mechanism for correcting imbalances between a country’s international payments and receipts.
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7-5 Balance of Payments The balance of payments ( BOP ) accounting system records international transactions and supplies vital information about the health of a national economy and likely changes in its fiscal and monetary policies.
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7-6 History of the International Monetary System The Gold Standard The Sterling-Gold Standard The Collapse of the Gold Standard The Bretton Woods Era The End of the Bretton Woods Era
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7-7 The Gold Standard Countries agree to buy or sell their paper currencies in exchange for gold on the request of any individual or firm and to allow the free export of gold bullion and coins.
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7-8 Fixed Exchange Rate System
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7-9 Sterling-Based Gold Standard British pound sterling was the most important currency from 1821 to 1918. Most firms would accept either gold or British pounds.
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7-10 Map 7.1 The British Empire, 1913
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7-11 The Collapse of the Gold Standard Economic pressures of WWI Countries suspended pledges to buy or sell gold at currencies’ par values Gold standard readopted in 1920s Dropped during Great Depression British pound allowed to float in 1931 Float: value determined by supply and demand
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7-12 Figure 7.1 The Contraction of World Trade, 1929-1933
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7-13 The Bretton Woods Era 44 countries met in Bretton Woods, New
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This note was uploaded on 09/05/2011 for the course MGMT 3400 taught by Professor Mr.henryh.c.ku during the Summer '11 term at Hawaii Pacific.

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griffin05_07 - the international monetary system and the...

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