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Chapter 15: Exchange Rate Systems and Currency Crises: 15-11c Study Questions
Book Title: International Economics
Printed By: Azmafazilah Jauhari (azma@ukm.edu.my)
2017 Cengage Learning, Cengage Learning

Chapter Review
15-11c Study Questions

1. What factors underlie a nation's decision to adopt floating exchange rates or

fixed exchange rates?

2. How do managed floating exchange rates operate? Why were they adopted
by the industrialized nations in 1973?

3. Why do some developing countries adopt currency boards? Why do others

dollarize their monetary systems?

4. Discuss the philosophy and operation of the Bretton Woods system of

adjustable pegged exchange rates.

5. Why do nations use a crawling peg exchange rate system?

6. What is the purpose of capital controls?

7. What factors contribute to currency crises?

8. Why do small nations adopt currency baskets against which they peg their
exchange rates?

9. What advantage does the SDR offer to small nations seeking to peg their
exchange rates?

10. Present the case for and the case against a system of floating exchange
rates.

11. What techniques can a central bank use to stabilize the exchange value of its
currency?

12. What is the purpose of a currency devaluation? What about a currency

revaluation?

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Chapter 15: Exchange Rate Systems and Currency Crises: 15-11c Study Questions
Book Title: International Economics
Printed By: Azmafazilah Jauhari (azma@ukm.edu.my)
2017 Cengage Learning, Cengage Learning

2017 Cengage Learning Inc. All rights reserved. No part of this work may by reproduced or used in any form or by any
means - graphic, electronic, or mechanical, or in any other manner - without the written permission of the copyright
holder.

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