T6 Alternative Foreign Exchange Regimes Flashcards

1
Q

Fixed ER

A

value of a currency pegged relative to the value of one other currency

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2
Q

Floating ER

A

value of a currency allowed to fluctuate against other currencies

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3
Q

Managed float (dirty float)

A

buying and selling currencies to influence ER

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4
Q

Gold standard

A

fixed ER, no control over monetary policy, influenced heavily by production of gold

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5
Q

Bretton woods system

A

IMF, after WW2 fixed ER based on convertibility of USD into gold, USD as reserves currency: largest economic power

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6
Q
A
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7
Q

Policy Trilemma

A

can have 2 of 3:
Fixed ER
Free Capital Mobility
Independent monetary policy

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8
Q
A
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9
Q

CA deficit implications

A

Suggests UK businesses may be losing ability ro compete because pound is too strong. UK deficit means surpluses in other countries - large increases in their int reserve holdings - world inflation

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10
Q

Contractionary monetary policy vs expansionary

A

Contractionary - will raise domestic IR & strengthen currency
Expansionary - lower IR rate & weaken currency

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11
Q
A
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