Shared Flashcard Set

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International Business Ch: 10
Ch: 10
15
Business
Undergraduate 3
03/07/2010

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Cards

Term
International Monetary System
Definition
The institutional arrangements countries adopt that govern exchange rates
Term
Floating Exchange Rates
Definition
a system under which the exchange rate for converting one currency into another is continuously adjusted depending on the law of supply and demand
Term
Pegged Exchange Rate
Definition
A system under which the value of a country's currency is fixed relative to a reference currency and then the exchange rate between that currency and other currencies is determined by the reference currency exchange rate.
Term
Dirty Float
Definition
A system under which a country's currency is nominally allowed to float freely against other currencies, but in which the government will intervene if it believes the currency has deviated too far from it fair value.
Term
fixed exchange rate
Definition
a system under which the exchange rate for converting one currency into another is a set at a constant rate.
Term
European Monetary System (EMS)
Definition
System for managing exchange rates of EU currencies against each other, Now replaced by the Euro.
Term
Gold Standard
Definition
The practice of pegging currencies to gold and guaranteeing convertibility
Term
Gold Par Value
Definition
The amount of currency needed to purchase one ounce of gold.
Term
Balance-of-Trade-Equilibrium
Definition
Reached when the income a country's residents earned form exports equals the money the pay for imports.
Term
Managed-Float System
Definition
System under which some currencies are allowed to float freely, but the majority are eithr managed by government intervention or pegged to another currency.
Term
Currency Board
Definition
A country's currency authority that holds reserves of foreign currency equal at the fixed exchange rate to at least 100 percent of the domestic currency issued in order to keep inflation down.
Term
Currency Crisis
Definition
When a speculative attack on the exchange value of a currency results in a sharp depreciation of the currency or forces authorities to expend large volumes of international currency reserves and sharply increase interest rates to defend the prevailing exchange rates.
Term
Banking Crisis
Definition
When individuals and companies lose confidence in the banking system and withdraw their deposits in what is called a "run on banks"
Term
Foreign Debt Crisis
Definition
A situation in which a country cannot service its foreign debt obligations, whether private-sector or government debt.
Term
Moral Hazard
Definition
When people behave recklessly because they know they will be saved if things go wrong.
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