International Monetary System Learn how exchange rates affect domestic and international companies Review factors that affect exchange rates Learn how exchange rates are forecasted Discuss how the international monetary system evolved and how it operates Explain the European monetary system and assess its performance record

Exchange Rates and Business Production Decisions Marketing Decisions Exchange Rates and Business Stability and Predictability Financial Decisions

Factors That Determine Exchange Rates Law of One Price Products Are Entirely Produced within Each Particular Country Products Are Identical in Quality and Content in All Countries

Factors That Determine Exchange Rates Parity of Purchasing Power Considering the Role of Inflation Understanding the Role of Interest Rates

Parity of Purchasing Power Added Costs Trade Barriers Parity of Purchasing Power Psychology Business Confidence

Forecasting Exchange Rates Efficient Market View Inefficient Market View

Forecasting Techniques Fundamental Analysis Technical Analysis

Evolution of the International Monetary System

The Gold Standard Reducing Exchange- Rate Risk Imposing Advantages Reducing Exchange- Rate Risk Imposing Strict Monetary Policies Correcting Trade Imbalances

Collapse of the Gold Standard Devaluation of Currency Arbitrary Par Values

The Bretton Woods Agreement Fixed Exchange Rates Built-In Flexibility The Bretton Woods Agreement The World Bank International Monetary Fund

Special Drawing Rights

Collapse of the Bretton Woods Agreement High U.S. Trade Deficit High U.S. Budget Deficit The Smithsonian Agreement Weakness of the U.S. Dollar

The Managed Float System Jamaica Agreement Plaza Accord Louvre Agreement

Exchange Rates Today Pegged exchange rates Limited flexibility exchange rates More flexible exchange rates

Recent Financial Crises The Debt Crisis Mexico’s Peso Crisis Southeast Asia’s Currency Crisis

Future of the International Monetary System Reform of the IMF One World, Ready or Not

The European Monetary System Set Rates of Exchange Promote Trade Minimize Inflation