五、

1.exchange control：a country's government places some restrictions on use of the foreign exchange market

2.capital controls：government policies that limit the ability of financial investors to transfer moneys in or out of the country.

3.clean float：exchange rates are determined by a freely functioning foreign exchange market

4.managed float：the optimist's term for a system by which a currency's exchange rate will float but with the government willing to intervene to attempt to influence the market rate

5.dirty float：the pessimist's term for a system by which a currency's exchange rate will float but with the government willing to intervene to attempt to influence the market rate

6.special drawing right (SDR)：a basket of the four major currencies in the world which is fixed to by many currencies

7.pegged exchange rate：a synonym of fixed exchange rate used to emphasize the fact that the government can change the target fixed rate

8.adjustable peg：an exchange rate system in which a countries tries to maintain a peg for as long as possible, but will change the peg if there are substantial disequilibriums at that rate

9.crawling peg：an exchange rate system in which the pegged exchange rate is changed often according to a set of indicators or according to the judgement of the governing monetary authority

10.reserve currency：a currency in which other countries often hold their reserves

11.sterilization：using monetary policy to offset the impact of intervention on the domestic money supply

12.Bretton Woods system：a post-WWII agreement which allowed for adjustable pegged exchange rates versus the U.S. dollar

13.the euro：the currency of the European Union that was created on 1/1/1999

14.ERM：a mechanism by which European countries maintained pegged exchange rates amongst themselves but floated with respect to other world currencies

15.The snake in the tunnel：an exchange rate mechanism employed by European countries in the 1970's whereby all member currencies would float within a band between the most appreciating and most depreciating member currencies.

 

1.Devaluing a nation's currency will be attractive to all of the following except: domestic importers.

2.Which of the following is not a viable way for a monetary authority to defend a fixed exchange rate? All of the above work.

3.Defense of a currency using exchange controls: will cause a, b, and c.

4.Developing countries tend to have: pegged exchange rates.

5.In the period before World War I, the exchange rate system that existed was the: Gold Standard.

 

1.Exchange controls can be used to influence the supply and demand for exchange and therefore be used to defend a fixed rate.

2.With a one-way speculative gamble, private speculators are encouraged to "attack" currencies that are deemed to be "in trouble."

3.It would have been possible to maintain the gold standard if the United States had simply purchased large amounts of British, French and German goods in the post-World War I period.

4.For all intensive purposes, the Bretton Woods system represented a re-establishment of the gold standard under a new name.      

5.Parallel markets represent a means by which private traders of currency can evade exchange controls.                     TTFFT

六、

1.nationally optimal tax：If a country is large enough to have power over the world market rate of return, it can exploit this market power to its own advantage and impose a tax on the outflow of funds at the expense of other countries and the world as a whole.

2.global contagion：when a crisis hits one country and spreads to other countries

3.moral hazard：when lenders and borrowers expect a bailout they worry less about the risk of a financial crisis and lend and borrow more than is prudent.

4.Brady Plan：repackaged bank borrowing of 18 debtor nations as U.S. government bonds

5.debt overhang：the amount by which a borrower's debt exceeds the present value of resource transfers that will be made for debt service

6.debt service：repayments of principal and interest.

7.foreign investment：lending or purchasing ownership in a foreign firm

8.international capital flows：financial flows of credit and ownership between countries

9.sovereign：when a national government has legal independence

10.tequila effect：when investors recall loans not only from a country facing a debt crisis, but also from all developing countries

 

1.Which of the following are things than can go wrong and leadto financial crises? all of the above

2.Without barriers to international lending, lender countries would _______ and borrower countries would _______.gain; gain

3.Which of the following is not a recent international financial crisis? Botswana, 1992

4.Which of the following is the most controversial proposed reform for the "international financial architecture"?Developing countries should make increased use of controls on capital inflows

5.Which of the following countries has been the biggest borrower in the 1990's? the United States

 

1.Debt rescheduling programs can be used to make debt service easier for borrowing countries to deal with by lowering the amount of debt.

2.A proposal to increase controls on capital flows into developing countries, if implemented, can be expected to limit over borrowing and exposure to contagion, but also reduce the benefits that can accrue from international borrowing.

3.Increases in interest rates in the U.S. can help borrowers in developing countries by increasing capital flows into developing countries and making it easier for them to repay their debts.

4.Increases in interest rates in the U.S. can help borrowers in developing countries by increasing capital flows into developing countries and making it easier for them to repay their debts.

5.If a country imposes a nationally optimal tax on international lending and the another country retaliates with its own tax, both countries can be made worse off as a result of the tax regime.     FTFTT

七、

1.internal balance：focuses on achieving domestic production that matches the country's supply capabilities so that resources are fully employed

2.external balance：the achievement of a reasonable and sustainable balance of payments with the rest of the world

3.marginal propensity to import：the amount by which imports increase when income goes up by one dollar

4.spending multiplier：the ratio of a change in national income to the change in autonomous spending that caused the income change

5.monetary policy：the set of central bank policies, institutions, and bank behavioral patterns governing the availability of bank checking deposits and currency in circulation

6.LM curve：shows all combinations of interest rate and domestic product that are equilibria between money supply and money demand

7.FE curve：shows the set of all interest-and-production combinations in our country that result in a zero value for the country's official settlements balance

8.perfect capital mobility：when capital flows are extremely sensitive to interest rates

9.IS curve：shows all combinations of interest rate and domestic product that are equilibriums in the national market for goods and services

10.foreign income repercussions：the effect on the national economy of a domestic income-induced change in imports that affects foreign income

11.fiscal policy：decisions about government spending and taxation

 

1.Which of the following will shift the LM curve outward? an increase in the money supply，a decrease in the demand for money

2.Which of the following will shift the FE curve outward? a decrease in imports

3.Which of the following will shift the IS curve inward? a decrease in domestic investment spending

4.Which of the following statements is true about aggregate demand?(1) Aggregate demand depends on national income .(2) In equilibrium, aggregate demand will equal national expenditures plus net exports. (1) and (2)

 

1.If interest rates, product price level, and exchange rates are held constant, an increase in government spending is expected to increase aggregate demand by the same amount.

2.If Country A's marginal propensity to import is smaller than Country B's marginal propensity to import, then Country A's spending multiplier is smaller than Country B's spending multiplier.

3.An exogenous decrease in imports will shift the IS curve to the right.

4.Expansionary monetary policy will shift the LM curve to the right.

5.The official settlements balance is in deficit if the IS-LM intersection is on the FE curve.    FFTTF