18 he International Financial System

18 he International - the purchasing power of different currencies-Tariff – a tax imposed by a government on imports-Quota – a

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The International Financial System - Floating Currency – the outcome of a country allowing its currency’s exchange rate to be determined by demand and supply - Exchange Rate System – an agreement among countries about how exchange rates should be determined - Managed Float Exchange Rate System – the current exchange rate system, under which the value of most currencies is determined by demand and supply with occasional government intervention - Fixed Exchange Rate System – a system under which countries agree to keep the exchange rates among their currencies fixed - Purchasing Power Parity – the theory that in the long run, exchange rates move to equalize
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Unformatted text preview: the purchasing power of different currencies-Tariff – a tax imposed by a government on imports-Quota – a government-imposed limit on the quantity of a good that can be imported-Main determinants of exchange rate in the long run 1) Relative price levels 2) Relative rates on productivity growth 3) Preferences for domestic and foreign goods 4) Tariffs ands quotas-Pegging – the decision by a country to keep the exchange rate fixed between its currency and another currency....
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This note was uploaded on 01/19/2012 for the course CIT 230 taught by Professor Staff during the Fall '08 term at Oakland University.

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