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Economics Test 2 Week 7&8


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When was the gold standard implemented?

What was it?
countries fixed price of gold, implicit (understood)exchange rate system
When and What is the interwar period?
economic consequences of the peace, gold standard restored, monetary nationalism
The Bretton Woods Conference developed:
International monetary fund, international bank for reconstruction and development (world bank), World Trade ORganization (GATT)
Who were the two main men that contributed to the Bretton Woods Institutions?
John Maynard Keynes & White
When was the Bretton Woods system implemented? What?
gold exchange standard, US fixed price of gold, other countries fixed their exchange rates to the dollar
Bretton Woods Conference seeks to: Rebuild ______ and ____
_____ ______ is created
Western Europe and Japan

World Bank is created.
Bretton Woods Conference seeks to: Insure _____ _______ ______
______ ________ _________ is created to oversee the Gold Exchange system
stable exchange rates,
International Monetary Fund
Bretton Woods Conference seeks to: Reduce ______ ______ barriers.
Reduce Global trade barriers:
_____ ______ _____ is proposed,
instead _____ is created, _____ ____ ____ created in 1995 by the Uruaguay Round negotiations (86-94)
International Trade Organization, GATT, WORLD TRADE ORGANIZATION
World Bank's identity crisis in the late 1950's?
Rebuilding of Europe and Pacific is done, turns attention to developing nations & helps poor countries grow and develop
IMF's identity crisis after 1973?
Turns to offering financial assistance and advice to countries who run "balance of payments difficulties", seeks to become world's largest credit union while offering help during times of financial crises
GATT (General Agreement on Tariffs and Trade) gets bigger and bigger and has difficulties over....
agriculture, intellectual property and services
World Bank Successes: rebuilt ____ ______ after WWII
Western Europe
Assisted _____ _____ after 1950's "Police Action)
South Korea, rebulit poor agriculture into an industrial advanced country
The ____ ____ in agriculture has reduced the incidence of famine around the world
Green Revolution, spreading knowledge and technology around the world to farmers and food producers
World Bank encouraged economic development through
Issues with World Bank:
World Bank often stressed _____ _____ policies
import substitution
WOrld bank issues: Block ____ with trade barriers and support creation of new domestic industries with _____ ____ subsides
imports, infant industry
World bank issues: Result of blocking imports & infant industry subsides...
inefficient protected domestic industries
Issues with World bank: _____ on government planned economic growth programs.
Overemphasis, policy suggestions result in growing government bureaucracy
Who pays for the bureaucracy?
government debt, internal political fights over who gets the WOrld Bank money
Is the World Bank too expensive?
Why is Africa so poor, so sick, and so unstable despite the billions of world bank money spent there?
Well paid world bank "consultants"
IMF Successes: IMF helped to expand ____ ____ through out the 1950s and 60s
global trade
IMF non political policy suggestions
provides discipline over politically driven policies
IMF encourages movement toward
market economies with
1. reduction of trade barriers
2. reduction in government budget deficits
3. financial market refor
IMF offers
financial advice along with assistance
Issues with IMF: Debt crises of the 1980s
IMF and commercial banks
IMF and large lender countries
Issues with IMF: Washington Consensus
a formula for promoting economic growth in many parts of Latin America and other parts of the world by introducing various market-oriented economic reforms which are designed to make the target economy more like that of First World countries such as the United States
Issues with IMF: Currency crises of the 1990s
interest rate defense, supply side policies, asia and Russia
GATT/WTO problems: Rise of ____ _____
TRADING BLOCS, free trading agreements, undermines GATT/WTO purpose
GATT/WTO issues: Concerns of _____ countries are addressed, while _____ nations concerns are ignored
richer, poorer
intellectual property v. agricultural subsidizes
GATT/WTO Problems: failure of the __________ Round
Meltzer Commission Report of 2000 suggested: IMF
IMF be limited to only short term lending, countries should pre qualify for IMF assistance, penalty interest rate borrowing from the IMF
Meltzer Commission Report of 2000: WORLD BANK, grants
Should provide grants not loans, grant decisions and oversight should be decentralized, more grants only if progress shown
Meltzer Commission: WOrld Bank, asssitance
Should limit it's assistance to the poorest of poor countries, less poor countries should get funding from the global financial markets
Meltzer Commission: World Bank, past
Outstanding debt forgiveness, admit the past was a mistake
Main theme of the Meltzer commission
IMF and WOrld Bank need to use today's modern global financial markets
Meltzer Commission Report on US influence
US state department needs to end its influence over the IMF and World Bank
controversial suggestions
Bretton Woods System: US became the deficit/surplus country?
deficit, foreign holdings of dollars
Bretton Woods: US became the high inflation country
need to devalue dollar (raise price of gold) or revalue other currencies
August 15, 1971
US severed link with gold
Flexible Exchange rates

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