The central feature of the Bretton Woods system was:
A. the use of a floating exchange rate regime.
B. official encouragement for one-way speculative gambles.
C. the use of capital controls.
D. the use of an adjustable pegged exchange rate regime.
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Which of the following is currently a main function of the International Monetary Fund (IMF)?
A. To loan reserves to countries that are attempting to finance temporary payments deficits
B. To loan money to developing countries to allow them to carry out programs that will improve the standard of living
C. To house the world’s gold supply
D. To set bilateral exchange rate values
Which of the following activities does the International Monetary Fund engage in?
A. Creation of special drawing rights
B. Regulation of large international banks
C. Provision of financial services to large international banks
D. Promotion of international trade by lowering tariffs and nontariff barriers
Which one of the following is NOT a way for a country to defend its fixed exchange rate?
A. Promote real appreciation of the country’s currency
B. Intervene in the foreign exchange market
C. Alter domestic interest rates
D. Impose some form of exchange control
Suppose the Japanese government pegs the yen to the U.S. dollar. What could the Japanese central bank do to prevent depreciation of the yen against the dollar in the foreign exchange market?
A. It would lower interest rates to discourage exports to the United States.
B. It would increase its official reserve holdings by buying dollars in the foreign exchange market.
C. It would print new currency notes and exchange them for other currencies in the foreign exchange market.
D. It would buy yen and sell dollars in the foreign exchange market.