Testul 1 RVFI - Belobrov Angela

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1. Which is the most basic element of the global system? The most basic element of the global system is the choice of the means of payment in cross-border transactions. 2. What does the International Monetary System represent? International Monetary Systems are sets of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross border investments and generally the reallocation of capital between national states. 3. What are the main Features of a Good International Monetary System? Features of A Good International Monetary System : Adjustment: a good system must be able to adjust imbalances in balance of payments quickly and a relatively lower cost. Stability and Confidence: the system must be able to keep exchange rates relatively fixed and people must have confidence in the stability of the system. Liquidity: the system must be able to provide enough reserve assets for a nation to correct its balance of payments deficits without making the nation run to deflation or inflation.