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Hi, I have a research about International monetary systems and this what my professor needs.
Each student is responsible for submitting 2 current event papers. In these current event papers students will
connect a current event to the theory or topic discussed in class that week. While the paper should provide an
overview of the current event, this is not a summary paper. Rather, the paper should be an analysis of the
contemporary topic or event through the lens of what you have learned in class. For example, how does the
current event illustrate or serve as an example of a broader theme or theory we discussed in class and why? How
might you predict an ongoing event to develop given class discussions and readings? How has class enhanced
your understanding of a given contemporary event and in what ways?
The topic you choose should be based on a story/stories from a reputable news source(s). Such sources include
The New York Times, The Washington Post, Al Jazeera, The Wall Street Journal etc (come and see me if you
have any questions about your source).
Requirements:
! Papers should be 750-1000 words (3-4 pages, double-spaced). Indicate the word count at the top of your
document (come see me if you’re not sure how to determine word count).
! Papers should be saved as .doc or .docx file
! You must include your source article(s). You can do this by including it with your paper, emailing me.
Also, this what I studied in my class.
Objectives
Define monetary system
Understand the differences between fixed and floating exchange rate systems and their tradeoffs
Understand the domestic interests for choosing one system over another
Monetary Systems
Exists to facilitate international economic exchange
How do I purchase Chinese goods if I have American dollar?
Why do we live in a world where currency values fluctuate rather than stay stable?
Exchange Rates
Price of one currency is terms of another
Determined by supply and demand of each currency
When more people want to buy more of one currency than sell it, the currency gains values or appreciates
“Strong”
When more people want to sell than buy a currency, the currency loses value or depreciates
“Weak”
Exchange Rate System
Rules that govern how much national currencies can appreciate or depreciate
2 primary systems:
Fixed – governments allowed to make only small changes in the exchange rate
Price is maintained bygovernment buying currency to decrease supply (increase value) or selling currency to increase supply (decrease supply)
Floating – no limits on how much an exchange rate can move
Price is maintained by the purchases and sales of currency by private actors
Exchange Rate Systems
Each system has tradeoffs
Fixed
Provides stability but prevents governments from using monetary policy to manage domestic economy
Floating
Can manage the domestic economy but doesn’t provide as much stability