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International Monetary Systems and European Integration in Macroeconomics

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이 집합의 용어 (20)

  • What was the bimetallic standard?
    A currency system based on both silver and gold, used in the U.S. from 1837 until the Civil War, where national currency units were minted from specified amounts of gold or silver.
  • What is the difference between gold circulation currency and gold core currency?
    Gold circulation currency involves full-value gold coins in circulation, while gold core currency is paper money backed by gold reserves held by monetary authorities.
  • How did the classical gold standard determine exchange rates?
    Central banks bought and sold unlimited gold at fixed exchange ratios, fixing exchange rates between currencies based on gold parity.
  • What were the key rules of the classical gold standard?
    Gold was the only official reserve, countries set gold parities, committed to buy/sell gold at parity, backed money supply with gold reserves, and allowed free gold trade.
  • What was the effect of the gold standard on price levels and monetary policy?
    It stabilized price levels and imposed monetary discipline, as excessive money supply expansion reduced gold stocks and money supply, focusing policy on exchange rate stability.
  • Why did the gold standard tend to balance payments?
    Because money supply, prices, and capital flows adjusted automatically, preventing significant balance-of-payments imbalances.
  • What caused the failure of the gold standard in the interwar period?
    Lack of international coordination, reserve shortages, exchange controls, trade restrictions, and economic imbalances.
  • What was the Bretton Woods system's main feature regarding currency exchange?
    Only the U.S. dollar was fixed to gold at a set parity; other currencies were pegged to the dollar within a 1% band, allowing limited parity changes.
  • What role did the IMF play in the Bretton Woods system?
    It monitored countries' economic policies and provided loans to correct balance-of-payments imbalances.
  • What is the Triffin Dilemma?
    The conflict where supplying the world with reserves requires U.S. deficits, increasing U.S. foreign debt and undermining confidence in the dollar.
  • Why did the Bretton Woods system collapse?
    Due to persistent U.S. deficits, rising inflation, overvaluation of the dollar, and suspension of gold convertibility by the U.S. in 1971.
  • What was the European Exchange Rate Association (1972)?
    An agreement among six European countries to maintain currency exchange rates within a +/- 1.25% band.
  • What was the goal of the European Monetary System (EMS) established in 1979?
    To prevent further disintegration of Europe by stabilizing exchange rates and coordinating monetary policies.
  • What was the European Currency Unit (ECU)?
    An artificial currency based on a weighted basket of European currencies used as a reference for exchange rate stability.
  • What caused the EMS to shift to a system of flexible exchange rates in 1993?
    Economic turbulence from German reunification and asymmetric development, plus countries dropping out, led to widening exchange rate margins to +/- 15%.
  • What were the Maastricht convergence criteria for joining the European Monetary Union?
    Price stability, interest rate convergence, exchange rate stability, fiscal stability with government debt limits of 3% deficit and 60% total debt to GDP.
  • What were the three stages of European Monetary Union implementation?
    Stage 1: Budget consolidation and capital control removal; Stage 2: Establishment of European Monetary Institute; Stage 3: Full monetary union if criteria met.
  • How did the gold standard influence international business cycles?
    Fixed exchange rates synchronized economic development across countries, linking investment, income, and import demand internationally.
  • What was the impact of the overvaluation of the British pound in the 1920s?
    It caused high current account deficits and contributed to the instability and eventual failure of the gold standard.
  • How did the Bretton Woods system handle capital controls?
    Capital controls were permitted in principle to manage international capital flows.