MOLDOVA  INSTITUTE  OF  INTERNATIONAL  ECONOMIC  
                                 RELATIONS 
                                      
                                      
                                      
                                      
                         INTERNATIONAL 
                       MACROECONOMICS:  
                        Questions & Answers 
                                      
                                      
                                      
           
                                      
                                 Edited  by  
                           Y.Kozak, A Gribincea  
                                      
                                      
           
                                      
                                      
                                      
                                      
                                      
                                      
           
           
           
                                                                  Chisinau-IRIM  
                                                                                     2017 
           
           
                          
                          
                          
                             ISBN 
                                                                                              
                             International Macroeconomics:  Questions and Answers. - Edited by Y. Kozak. 
                         A Gribincea – Chisinau- IRIM , 2017. – 242 p. 
                          
                          
                          
                         Authors : 
                         Y. Kozak, A Gribincea , T.Shengelia , O.Zakharchenko, O.Sulym, I.Ukhanova,  
                          
                                    
                                    
                                    
                                    
                                   ISBN  
                                    
                                 The textbook deals with the major international economic problems in the 
                         system of contemporary economic theory (Microeconomics, Macroeconomics, 
                         International Economics). The system of exchange rates, balance of payments, 
                         the functioning of international financial markets in the context of globalization 
                         are explored by means of the instruments of  macroeconomics analysis. The 
                         review of macroeconomic policy in open system of international economics is the 
                         logical conclusion of the course content. 
                                 For students and academics . 
                                  
                                  
                                  
                                  
                                  
                                 ISBN   
                                                                                                           
                                                                                                           
                                                                                                                           
                                                                                            
                                                                                            
                                                                                                    © Y. Kozak, A Gribincea , 2017 
                                                                                                    © IRIM , 2017 
                                              BRIEF CONTENTS 
                 
                PREFACE…………………………………………………………………..                                                 8 
                 
                PART  I.  OPEN  ECONOMY  MACROECONOMICS:  GLOBAL 
                MONETARY SYSTEM……………………………………………………  10 
                Chapter 1. Currency and Exchange Rates ……………………………….                              10 
                Chapter 2. Currency Relations and the Balance of Payments ………….                   27 
                Chapter 3. Evolution of the Global Monetary System ……………….….                      59 
                 
                PART II. OPEN ECONOMY MACROECONOMICS: THE WORLD 
                FINANCIAL SYSTEM …..………………………………………………..  66 
                Chapter 4. Characteristics of the World Financial System ……………..                  66 
                Chapter 5. World Financial Centers …………...…………………………                              80 
                Chapter 6. Features of modern world monetary and financial crises…..              92 
                 
                PART  III.  FINANCIAL  MARKETS  IN  INTERNATIONAL 
                MACROECONOMICS ……………………………………………………  102 
                Chapter 7. International Foreign Exchange Market …………...………..                    102 
                Chapter 8.  International Credit Market ……………................................    121 
                Chapter 9.  International Securities Market……………………………...                        143 
                 
                PART IV. MACROECONOMIC POLICY IN OPEN SYSTEM OF 
                INTERNATIONAL ECONOMICS …………….………………………...  201 
                Chapter 10. Goals and Instruments of Macroeconomic Policy in Open 
                Economy ……………………………………………………………………  201 
                Chapter  11.  Macroeconomic  Equilibrium  at  Fixed  and  Floating 
                Exchange Rates …………………………………………………………….  215 
                Chapter 12. Application of the IS-LM-BP Model to Analyze the Effect 
                of External Shocks in Open Economy…………………….. ……………..                             237 
                 
                BIBLIOGRAPHY…………………………………………………….…….  242 
                 
                                                                                                    
                 
                 
                 
                                                            
                                                            
                                                            
                                                            
                                                            
                 
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                                                                CONTENTS 
                    PREFACE…………………………………………………………………                                                                         8 
                     
                                                                                                                               
                    PART  I.  OPEN  ECONOMY  MACROECONOMICS:  GLOBAL 
                                                                                                                            10 
                    MONETARY SYSTEM …………….…………………………………….. 
                     
                                                                                                                               
                    Chapter 1. Currency and Exchange Rates ……………………………….                                                    10 
                    1.1. What is the essence of currency and what are the types of currency?......                          10 
                    1.2. What is convertibility of currency?..........................................................      11 
                    1.3. What is the essence of exchange rate?......................................................        13 
                    1.3.1. What types of exchange rates exist?......................................................        15 
                    1.3.2. Why is it necessary to know the cross-rate and tripartite arbitration?... 
                                                                                                                            17 
                    1.3.3. What are the regimes of the exchange rates?.........................................             18 
                    1.4. The equilibrium exchange rate………………………………………….                                                     20 
                    1.4.1. How does the demand and supply for foreign currency appear?...........                           20 
                    1.4.2. Do the prices depend on the exchange rate changing?..........................                    21 
                    1.5. Forecasting the exchange rate…………………………………………...                                                   22 
                    1.5.1. What factors can affect the exchange rate?...........................................            22 
                    1.5.2. How is the exchange rate forecasted?....................................................         24 
                                                                                                                               
                    Chapter 2. Currency Relations and the Balance of Payments …………                                          27 
                    2.1. The essence of currency relations and currency policy…………………                                       27 
                    2.1.1. What is the essence of currency relations?............................................           27 
                    2.1.2. What is the essence of currency policy?................................................          27 
                    2.1.3. What are the forms of currency policy?.................................................          28 
                    2.2. International settlements: essence and forms……………………………                                            30 
                    2.2.1. What is the essence of international settlements?..................................              30 
                    2.2.2. What are the main forms of the international payments?......................                     33 
                    2.3. International payment systems…………………………………………..                                                    35 
                    2.3.1. What is the essence of international payment systems and its risks?....                          35 
                    2.3.2. What are basic principles of effective functioning of payment systems?..                         36 
                    2.3.3. What types of international payment systems exist?.............................                  37 
                    2.4. Balance of payments and its structure…………………………………..                                               40 
                    2.4.1. What is the essence of the balance of payments?..................................                40 
                    2.4.2. What are the formation principles of the balance of payments?............                        41 
                    2.4.3. What are the standard components of the balance of payments?..........                           45 
                    2.4.4. What is the essence of items of current account? ……………………..                                      46 
                    2.4.5. What is the essence of items of capital and financial account? ………                               48 
                    2.4.6. What are the reserve assets?..................................................................   50 
                    2.5. How are the items of balance of payments balanced?..............................                   50 
                    2.6. State regulation of the balance of payments                                                        53 
                    2.6.1.  What  is  the  essence  of  the  concept  of  economic  equilibrium  of 
                                                                                                                            53 
                    balance of payments?....................................................................................... 
                    2.6.2.  What are the main economic factors that influence the balance of                                54 
                     
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