To facilitate international trade and investment

To determine the value of currencies

To regulate the flow of capital between countries

To provide liquidity to financial institutions

The theory that the exchange rate between two currencies should be equal to the ratio of their purchasing power

The theory that the exchange rate between two currencies should be equal to the ratio of their interest rates

The theory that the exchange rate between two currencies should be equal to the ratio of their inflation rates

The theory that the exchange rate between two currencies should be equal to the ratio of their GDPs

A record of all economic transactions between a country and the rest of the world

A record of all financial transactions between a country and the rest of the world

A record of all trade transactions between a country and the rest of the world

A record of all investment transactions between a country and the rest of the world

A record of a country's trade in goods and services

A record of a country's trade in goods

A record of a country's trade in services

A record of a country's trade in goods and financial assets

A record of a country's investment flows

A record of a country's financial flows

A record of a country's foreign direct investment

A record of a country's portfolio investment

A depreciation of the currency will lead to a trade deficit

An appreciation of the currency will lead to a trade surplus

A depreciation of the currency will lead to a capital inflow

An appreciation of the currency will lead to a capital outflow

The ability of a currency to be freely exchanged for another currency

The ability of a currency to be freely exchanged for gold

The ability of a currency to be freely exchanged for goods and services

The ability of a currency to be freely exchanged for financial assets

To promote international monetary cooperation

To provide financial assistance to countries facing balance of payments problems

To regulate the foreign exchange market

To set exchange rates between currencies

To provide financial assistance to developing countries

To promote economic development in developing countries

To regulate the foreign exchange market

To set exchange rates between currencies

In a fixed exchange rate regime, the central bank intervenes to keep the exchange rate at a predetermined level, while in a floating exchange rate regime, the exchange rate is determined by market forces.

In a fixed exchange rate regime, the central bank intervenes to keep the exchange rate at a predetermined level, while in a floating exchange rate regime, the exchange rate is determined by the government.

In a fixed exchange rate regime, the central bank intervenes to keep the exchange rate at a predetermined level, while in a floating exchange rate regime, the exchange rate is determined by the IMF.

In a fixed exchange rate regime, the central bank intervenes to keep the exchange rate at a predetermined level, while in a floating exchange rate regime, the exchange rate is determined by the World Bank.

Advantages: stability, predictability, and low transaction costs; Disadvantages: loss of monetary independence and vulnerability to external shocks

Advantages: stability, predictability, and low transaction costs; Disadvantages: loss of monetary independence and vulnerability to internal shocks

Advantages: stability, predictability, and low transaction costs; Disadvantages: loss of fiscal independence and vulnerability to external shocks

Advantages: stability, predictability, and low transaction costs; Disadvantages: loss of fiscal independence and vulnerability to internal shocks

Advantages: monetary independence and flexibility to respond to external shocks; Disadvantages: volatility, uncertainty, and higher transaction costs

Advantages: monetary independence and flexibility to respond to internal shocks; Disadvantages: volatility, uncertainty, and higher transaction costs

Advantages: fiscal independence and flexibility to respond to external shocks; Disadvantages: volatility, uncertainty, and higher transaction costs

Advantages: fiscal independence and flexibility to respond to internal shocks; Disadvantages: volatility, uncertainty, and higher transaction costs

Interest rates, inflation, economic growth, and political stability

Interest rates, inflation, fiscal policy, and monetary policy

Interest rates, inflation, trade balance, and capital flows

Interest rates, inflation, government debt, and foreign exchange reserves

Forwards, futures, options, and swaps

Forwards, futures, options, and bonds

Forwards, futures, options, and stocks

Forwards, futures, options, and currencies

To lock in the exchange rate for a future transaction

To speculate on the future movement of the exchange rate

To hedge against the risk of exchange rate fluctuations

To facilitate international trade and investment