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intentionally lowering the value of a nation's currency
devaluation
intentionally raising the value of a nation's currency
revaluation
principe that an identical item must have an identical price in all countries when the price is expressed in a common currency
law of one price
principle that the nominal interest rate is the sum of the real interest rate and the expected rate of inflation over a specific period
Fisher effect
principle that a difference in nominal interest rates supported by two countries' currencies will cause an equal but opposite change in their spot exchange rates
international Fisher effect
view that prices of financial instruments reflect all publicly available information at any given time
efficient market view
view that prices of financial instruments do not reflect all publicly available information
inefficient market view
technique that uses statistical models based on fundamental economic indicators to forecast exchange rates
fundamental analysis
technique that uses charts of past trends in currency prices and other factors to forecast exchange rates
technical analysis
collection of agreements and institutions that govern exchange rates
international monetary system
international monetary system in which nations link the value of their paper currencies to specific values of gold
gold standard
system in which the exchange rate for converting on currency into another is fixed by international agreement
fixed exchange-rate system
agreement (1944) among nations to create a new international monetary system based on the value of the U.S. dollar
Bretton Woods Agreement
economic condition in which a trade deficit causes a permanent negative shift in a country's balance of payments
fundamental disequilibrium
IMF asset whose value is based on a "weighted basket" of four currencies
special drawing right (SDR)
agreement (1971) among IMF members to restructure and strengthen the international monetary system created at Bretton Woods
Smithsonian Agreement
agreement (1976) among IMF members to formalize the existing system of floating exchange rates as the new international monetary system
Jamaica Agreement
exchange-rate system in which currencies float against one another, with governments intervening to stabilize their currencies at particular target exchange rates
managed float system
exchange-rate system in which currencies float freely against on another, without governments intervening in currency markets
free float exchange
monetary regime based on an explicit commitment to exchange domestic currency for a specified foreign currency at a fixed exchange rate
currency board
The international monetary system where gold is money and central banks kept wealth in gold with gold-backed notes
Gold Standard (Past -> WWI 1918)
The international monetary system that was based on a "print and spend" mentality
1918 - 1945
The international monetary system that is headed by the IMG and the World Bank; the $ became a central reserve asset, and world international currency; all currencies were given values in terms of the $
Gold Exchange Standard (1945 > 1971)
International monetary system in which sigma hard currencies as central reserve assets; rates are determined by supply and demand