Macroeconomics 111 - Chapter 22

Macroeconomics 111 - Chapter 22 - 1 CHAPTER 22 Exchange...

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1 CHAPTER 22 – Exchange Rates / Financial Links Between Countries Commodity Standard -A commodity standard exists when exchange rates are fixed based upon the values of different currencies in terms of some commodity Gold Standard -A system whereby national currencies are fixed in terms of their value in gold, thus creating fixed exchange rates between countries Bretton Woods Agreement -The agreement called for a gold exchange standard -The US price of fold was fixed at $35 per ounce -Other countries fixed their currencies in terms of gold, but bought and sold US dollars to maintain their fixed exchange rates -The US dollar became the reserve currency of the system. A reserve currency is a currency that is used to settle international debts and is held by governments to use in foreign exchange market intervention Led to the creation of… International Monetary Fund (IMF) -Supervise the exchange-rate practices of member countries -To lend money to member countries that are experiencing problems meeting their
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This note was uploaded on 04/07/2008 for the course ECON 111 taught by Professor H during the Spring '07 term at UConn.

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Macroeconomics 111 - Chapter 22 - 1 CHAPTER 22 Exchange...

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