International Business Chapter 10 - international monetary system - terms

Devaluation -- intentional lowering of the value of the nation's currency
revaluation -- intentional raising of the value of the nation's currency.
Law of one price -- principle that an identical item must have an identical price in all countries when the price is expressed in a common currency
Fisher effect -- printable that the nominal interest rate is the sum of the real interest rate and the expected rate of inflation over a specific period.
International Fisher effect -- principle that a difference in nominal interest rates supported by two countries currency will cause an equal but opposite change in their spot exchange rates.
Efficient market view -- view that prices of financial instruments reflect all publicly available information at any given time.
Inefficient market view -- view that prices are financial instruments do not reflect all publicly available information.
Fundamental analysis -- technique using statistical models based on fundamental economic indicators to forecast exchange rates.
Technical analysis -- technique using charts of past trends in currency prices and other factors to forecast exchange rates.
International monetary system -- collection of agreements and institutions governing exchange rates.
Gold standard -- international monetary system in which nations linked the value of their paper currencies to specific values of gold.
Fixed exchange- rate system -- system in which the exchange rate for converting one currency into another is fixed by international agreement.
Bretton Woods agreement -- agreement (1944) among nations to create a new international monetary system based on the value of the US dollar.
Fundamental disequilibrium -- economic condition in which a trade deficit causes a permanent negative shift in the country's balance of payments.
Special drawing right (SDR) -- international monetary fund asset whose value is based on a "weighted basket." Of the currencies of five industrialized countries.
Smithsonian agreement -- agreement (1971) among international monetary fund Members to restructure and strengthen the international monetary system created at Bretton Woods.
Jamaica agreement -- agreement (1976) among international monetary fund members to formalize the existing system of floating exchange rates as the new international monetary system.
Managed float system -- exchange-rate system in which currencies float against one another, with governments intervening to stabilize their currencies at particular target exchange rates.
Free float system -- exchange-rate system in which currencies float freely against one another, without governments intervening in currency markets.
Currency board -- monetary regime that is based on a explicit commitment to exchange domestic currency for specified foreign currency at a fixed exchange rate