The Present Floating Exchange Rate System Was

question 79

Multiple Choice

The present floating exchange rate system was

• A) designed by the IMF and implemented flawlessly in 1973.
• B) established by the major trading nations in 19721 after Nixon closed the gold window.
• C) implemented in tandem with a reintroduction of the gold standard.
• D) established after several trials in which central bankers set rates incorrectly and speculators corrected them in the markets, and formalized after the fact in the IMF's Jamaica Agreement.

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Definitions:

Interest Expense

The monetary burden placed on an entity due to borrowing capital over a specified timeframe.

Market Rate

The prevailing interest rate available in the market for loans or the return on investment securities.

Adjusting Entry

An accounting journal entry made at the end of an accounting period to update the accounts and ensure they comply with the accrual basis of accounting.

Borrowing Rate

The interest rate that a financial institution charges a borrower for the use of money.