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15 Cards in this Set
- Front
- Back
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International Monetary System
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Institutional arrangements countries adopt to govern exchange rates.
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Floating Exchange Rates
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A system under which the exchange rate for converting one currency into another is continuously adjusted depending on the laws of supply and demand.
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Pegged Exchange Rate
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Currency value is fixed relative to a reference currency.
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Dirty Float
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A system under which a country's currency is nominally allowed to float freely against other currencies, but in which the government will intervene, buying and selling currency, if it believes that the currency has deviated too far from its fair value.
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Fixed Exchange Rate
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A system under which the exchange rate for converting one currency into another is fixed.
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European Monetary System (EMS)
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A system to regulate fixed exchange rates before the introduction of the euro.
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Gold Standard
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The practice of pegging currencies to gold and guaranteeing convertibility.
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Gold Par Value
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The amount of currency needed to purchase one ounce of gold.
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Balance-of-Trade Equilibrium
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Reached when the income a country's residents earn from exports equals the money residents pay for imports.
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Managed-Float System
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System under which some currencies are allowed to float freely, but the majority are either managed by government intervention or pegged to another currency.
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Currency Board
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Means of controlling a country's currency.
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Currency Crisis
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Occurs when a speculative attack on the exchange value of a currency results in a sharp depreciation in the value of the currency or forces authorities to expend large volumes of international currency reserves and sharply increase interest rates to defend the prevailing exchange rate.
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Banking Crisis
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A loss of confidence in the banking system that leads to a run on banks, as individuals and companies withdraw their deposits.
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Foreign Debt Crisis
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Situation in which a country cannot service its foreign debt obligations, whether private-sector or government debt.
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Moral Hazard
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Arises when people behave recklessly because they know they will be saved if things go wrong.
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