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The International Monetary System

The International Monetary System. Key Vocabulary. (M)BRICS(K) . An acronym of Mexico, Brazil, Russia, India, China, South Africa, and South Korea. Some economists believe that the (M)BRICS(K) countries will constitute a very large part of the world economy by 2050. B alance of Trade.

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The International Monetary System

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  1. The International Monetary System Key Vocabulary

  2. (M)BRICS(K) • An acronym of Mexico, Brazil, Russia, India, China, South Africa, and South Korea. Some economists believe that the (M)BRICS(K) countries will constitute a very large part of the world economy by 2050.

  3. Balance of Trade • The difference in value between a country’s imports and exports.

  4. Balance of Payments • The difference between the total of all payments into a country from other countries for goods, services, and investments and the total of all payments from the country to other countries for goods, services, and investments.

  5. Bretton Woods • A 1944 conference in New Hampshire to stabilize the world’s currency system. It led to the creation of the IMF and the World Bank.

  6. Central Banks • Organizations established by governments to issue and manage a currency, manage that currency’s exchange rate, influence the country’s interest rate, monitor and regulate the creation of credit by the banking system, and act as the lender of last resort to the banks to keep the banking system stable in emergencies.

  7. Competitive Devaluation • A pre-WWII global economic problem where countries devalued their currencies in the effort to be more competitive with other countries in selling exports but only provoked other countries to do the same, which lead to global economic instability.

  8. Convertibility • Description of currency that can be bought and sold freely on the foreign exchange (FX) market, is readily available, and can be used for normal lawful purposes without any restrictions.

  9. Current Account • The account showing the total flows of money into and out of a country, not including flows of money for the purpose of making investments.

  10. Current Account Balance of Payments • The difference between the current account inflows into a country and the current account outflows from that country.

  11. Gold Par Value • The amount of currency needed to purchase one ounce of gold.

  12. Gold Standard • An exchange rate regime that pegs the value of a currency to gold and guarantees that all issued currency can be converted to gold on demand.

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