Answer Happy

15. The International Monetary Fund (IMF) has been a major source of financing for countries in severe balance-of-payments and external debt difficulties, even though, at times, it has been criticized for its condi- tionality approach. 16. There is evidence that the law of one price holds for the U.S. even though the pass-through of exchange rate changes is less than complete. 17. If exports are payable in dollars while imports require payment in for- eign currency, a change in the nominal exchange rate automatically transfers into a change in the price of imported goods relative to local goods. 18. Eurqbanking have grown rapidly because of lack of regulation and con- sequent opportunity for Eurobanks to pay slightly higher deposit rates and make international loans at slightly lower loan rates. 19. If the balance on current account is positive (a surplus), adjustment of the balance to zero would usually require the real exchange rate to rise (a real depreciation). 20. The variability of real exchange rates has been much greater when a country adopts of fixed exchange rates (as under the Bretton-Woods system) than when it floats its nominal exchange rate.