Money, Banking, and International Finance- Please define the following terms: current account, trade balance, financial account, and
official settlement balance. - Why does a statistical discrepancy occur in the balance-of-payments accounts?
- Please define and distinguish the three exchange rate regimes.
- Identify the functions of the World Bank.
- Identify the functions of the IMF.
- If a country has a fixed rate regime and experiences a balance-of-payments deficit, please
explain how the country must maintain this exchange rate. Furthermore, what happens if the
government runs out of reserves and refuses to let the official exchange rate change? - Explain the J-curve Effect.
- If a country has a managed float exchange rate regime and experiences a balance-of-
payments surplus, please explain how the country must maintain this exchange rate. In your
answer, include the actions of the central bank. - Why is capital flight disruptive to a country, and which four methods could an investor use
to transfer his financial capital from a country experiencing a crisis? - Many foreign investors are worried over the U.S. government’s large trillion-dollar deficits,
and the U.S. economy is plagued by massive trade deficits. What happens to the U.S.
hegemony’s power if the U.S. dollar collapsed in value?