How does a country that introduces a currency board make its commitment to converting its domestic currency on demand into another currency at a fixed exchange rate credible? Gold coins, as well as paper notes backed by or which can be redeemed for gold, are used as currency under … In 1987, the Group of Five met over concerns that ______ and the result was the creation of the Louvre Accord. e. rise and fall. Which of the following statements is true about the gold standard? Which of the following is a reason for the emergence of the gold standard? Under the Bretton Woods system, if a country developed a permanent deficit in its balance of trade that could not be corrected by domestic policy, this would require the: International Monetary Fund to agree to a currency devaluation. In 1944, representatives from 44 countries met in ______ to create a new international monetary system. When a government intervenes in the currency market to limit volatility of its currency, a(n) ______ system exists. The international monetary system establishes the rules and regulations that govern ______. Under the gold standard, a balance of payment disequilibrium will be corrected by a counter-flow of gold. A pegged exchange rate means the value of a currency is. True or false: One argument in favor of a floating rate system, is that under a fixed system, a country's ability to expand or contract the money supply is unlimited. `The Louvre Accord resulted in an agreement. Exchange rates have become much more volatile. According to the text, what two things have been key in determining the value of the dollar since 1973? Increased foreign investments in U.S. financial assets. The goal of Bretton Woods was to design a new ______ that would encourage growth after the war. Under the gold standard, a country in balance-of-trade equilibrium will experience a net flow of gold from other countries. The ______ Agreement revised the IMF's Articles of Agreement and addressed floating exchange rates. The OPEC oil crisis in 1971 increased the US inflation rate, which led to negative effects on the trade position. This set off massive purchases of _____ in the foreign market by speculators. Jade, a working professional, began driving rashly ever since she got her car insured against damage. When a country pegs its currency to gold, it is using the _____. An argument against a fixed rate system is that this system limits countries' abilities to use ______ policy to expand or contract their economies. The major problem with the gold standard was that no multinational institution could stop countries from engaging in competitive devaluations. A(n) _____ system refers to an exchange rate system under which a country's exchange rate is allowed to fluctuate against other currencies within a target zone. A pegged exchange rate means the value of the 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. When Great Britain returned to the gold standard in 1925, it placed the pound at the prewar gold parity level and, as a result, placed the country in a period of depression. Given a common gold standard, the value of any currency in units of any other currency was easy to determine. The Coinage Act of 1873 or Mint Act of 1873, 17 Stat. Under a gold standard a balance of payments disequilibrium would be corrected automatically by: is also known as the gold standard and met its demise in the 1930s. Which of the following statements is true about the current monetary system? The gold standard is a monetary system backed by the value of physical gold. A country on the gold standard cannot increase the amount of money in circulation without also increasing its gold reserves. How can the dollar exchange rate BEST be described under the floating exchange regime?