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Chapter 6 International Monetary System
MGT 450 International Business Test 1
15
Management
Undergraduate 4
02/10/2019

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Term
Bullion
Definition
Purest form of the precious metal and usually in a bar or coin format. Often refers to gold or silver bars or coins; typically used for monetary or economic purposes
Term
International Monetary System
Definition
The system and rules that govern the use of money around the world and between countries
Term
Gold standard
Definition
The pre World War I global monetary system that used gold as the basis of international economic exchange.
Term
Fixed exchange rate system
Definition
A system in which the price of one currency vis-à-vis another is fixed and does not change
Term
Exchange rate
Definition
The price of one currency in terms of a second currency
Term
Trade deficit
Definition
When the value of imports is greater than the value of exports
Term
Float
Definition
When a currency's value increases or decreases based on demand and supply
Term
Triffin Paradox
Definition
Named after the economist Robert Triffin, who stated that the more dollars foreign countries held, the less faith they had in the ability of the US government to convert those dollars.
Term
Reserve
Definition
There are several different kinds of reserves, which refers to a percentage of an asset. Countries maintain foreign exchange reserves (also called forex reserves or FX reserves), which is money or other assets held by a central bank or other monetary authority so that it can pay if need be its liabilities. Bank reserves refers to the holdings of deposits in central banks plus currency that is physically held in bank vaults.
Term
Reserve currency
Definition
A main currency that many countries and institutions hold as part of their foreign exchange reserves. Reserve currencies are often international pricing currencies for world products and services. Current reserve currencies are the US dollar, the euro, the British pound, the Swiss franc, and the Japanese yen.
Term
Managed float system of exchange rates
Definition
A system in which currencies float against one another with governments intervening only to stabilize their currencies at set target exchange rates.
Term
Free floating exchange rate system
Definition
A system in which currencies freely float against each other and there is no government intervention
Term
Group of Five (G5)
Definition
The original five largest industrial powers - Britain, France, Germany, Japan, and the United States - who met to reduce and stabilize the value of the dollar
Term
Special Drawing Right (SDR)
Definition
An international monetary reserve asset of the IMF (International Money Fund)
Term
Renminbi
Definition
Official name of the Chinese currency. Yuan is the main unit of the currency
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