11. Decreases in currency values within a fixed rate system are called devaluations. 12. Decreases in currency values within a floating rate system are called devaluations. 13. Special Drawing Rights...

11. Decreases in currency values within a fixed

rate system are called devaluations.

12. Decreases in currency values within a

floating rate system are called devaluations.

13. Special Drawing Rights (SDRs) are distributed

to commercial banks within the European Union (EU) in proportion to that member’s

proportion of EU trade.

14. “The snake” refers to the serpentine path

that exchange rates have followed since the introduction of the euro in 2002.

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15. Moral hazard is the risk that the existence

of a contract will change the behaviors of parties to the contract.

16. IMF loans to troubled economies are unlikely

to change the behaviors of investors, because investors can assess the risks of

moral hazard for themselves.

17. Subprime loans are loans that are issued at

an interest rate below the prime rate.

18. Liquidity refers to the ease with which an

asset can be exchanged for another asset of equal value.