Marking the benchmarks along your route (ie, Bretton Woods, Smithsonian, Jamaica, Plaza, and the Louvre Accords,...

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Economics

Marking the benchmarks along your route (ie, Bretton Woods,Smithsonian, Jamaica, Plaza, and the Louvre Accords, etc), tracethis evolution from its origins in the gold standard, through thefixed and the floating exchange rate systems to the managed floatsystem we are living in today (15 pts).

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ExchangeRate Systems A fixed exchange rate sometimes called a pegged exchange rate is a type of exchange rate regime in which a currencys value is fixed or pegged by a monetary authority against the value of another currency a basket of other currencies or another measure of value such as gold Monetary Order A set of laws and regulations that establishes the framework within which individuals conduct and settle transactions ExchangeRate System A set of rules that determine the international value of a currency Convertibility The ability to freely exchange a currency for a reserve commodity eg gold or reserve currency There are benefits and risks to using a fixed exchange rate system A fixed exchange rate is typically used to stabilize the exchange rate of a currency by directly fixing its value in a predetermined ratio to a different more stable or more internationally prevalent currency or currencies to which the currency is pegged The Gold Standard Under this system the external value of all currencies was denominated in terms of gold with central banks ready to buy and sell unlimited quantities of gold at the fixed price Each central bank maintained gold reserves as their official reserve asset The Gold Standard As an Exchangerate System Allowed the exchange of a currency both domestically and internationally at the mint parity rate for the currency Determines the international exchange value of the currency between gold and the currency Positive of a Gold Standard Creates longrun stability of the nations money stock and longrun stability of prices and exchange rates Changes in a nations money stock depend only on changes in the mining and production of monetary gold Using monetary gold does not require a central bank See Answer

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