Question 1

Suppose that the United States is on a bimetallic standard at $30 to one ounce of gold and $2 for one ounce of silver.If new silver mines open and flood the market with silver,

Accepted Answer

A)  only the silver currency will circulate.
B)  only the gold currency will circulate.
C)  no change will take place since citizens could exchange their gold currency for silver currency at any time.
D)  none of the aboveE) A) and D)
F) A) and C)

Question 2

Put the following in correct date order:

Accepted Answer

A)  Jamaica Agreement, Bretton Woods Agreement, Smithsonian Agreement.
B)  Smithsonian Agreement, Bretton Woods Agreement, Jamaica Agreement.
C)  Bretton Woods Agreement, Smithsonian Agreement, Jamaica Agreement.
D)  Bretton Woods Agreement, Jamaica Agreement, Smithsonian Agreement.E) All of the above
F) B) and D)

Question 3

The Bretton Woods agreement resulted in the creation of

Accepted Answer

A)  the bancor as an international reserve asset.
B)  the World Bank.
C)  the Eximbank.
D)  the Federal Reserve Bank.E) B) and C)
F) None of the above

Question 4

During the 1990s there

Accepted Answer

A)  were three major currency crises.
B)  were two major currency crises.
C)  was only one currency crisis.
D)  were no major currency crisesE) C) and D)
F) All of the above

Question 5

Put the following in correct date order:

Accepted Answer

A)  Jamaica Agreement, Plaza Agreement, Louvre Accord.
B)  Plaza Agreement, Jamaica Agreement, Louvre Accord.
C)  Louvre Accord, Jamaica Agreement, Plaza Agreement.
D)  Jamaica Agreement, Louvre Accord, Plaza Agreement.E) B) and D)
F) A) and B)

Question 6

Ecuador does not have its own national currency,circulating the U.S.dollar instead.About how many countries do not have their own national currency?

Accepted Answer

A)  10
B)  20
C)  30
D)  40E) A) and D)
F) A) and C)

Question 7

Suppose that Britain pegs the pound to gold at the market price of £6 per ounce,and the United States pegs the dollar to gold at the market price of $36 per ounce.If the official exchange rate between pounds and U.S.dollars is $5 = £1.Which of the following trades is profitable?

Accepted Answer

A)  Start with £100 and trade for $500 at the official exchange rate.Redeem the $500 for 13.89 ounces of gold.Trade the gold for £83.33.
B)  Start with $100 and buy gold.Sell the gold for £16.67.Sell the pounds at the official exchange rate.
C)  Start with £100 and buy gold.Sell the gold for $600.
D)  Start with $500 and trade for £100 at the official exchange rate.Redeem the £100 for 16 2/3 ounces of gold.Trade the gold for $600.E) B) and C)
F) A) and D)

Question 8

Suppose that your country officially defines gold as ten times more valuable than silver (i.e.the central bank stands ready to redeem the currency in gold and silver and the official price of gold is ten times the official price of silver) .If the market price of gold is only eight times as much as silver.

Accepted Answer

A)  The central bank could go broke if enough arbitrageurs attempt to take advantage of the pricing disparity.
B)  The central bank will make money since they are overpricing gold.C) A) and B)
D) undefined

Question 9

In the 1850s the French franc was valued by both gold and silver,under the official French ratio which equated a gold franc to a silver franc 15½ times as heavy.At the same time,the gold from newly discovered mines in California poured into the market,depressing the value of gold.As a result,

Accepted Answer

A)  the franc effectively became a silver currency.
B)  the franc effectively became a gold currency.
C)  silver became overvalued under the French official ratio.
D)  answers a)  and c)  are correctE) C) and D)
F) A) and C)

Question 10

Prior to the 1870s,both gold and silver were used as international means of payment and the exchange rates among currencies were determined by either their gold or silver contents.Suppose that the dollar was pegged to gold at $30 per ounce,the French franc is pegged to gold at 90 francs per ounce and to silver at 9 francs per ounce of silver,and the German mark pegged to silver at 1 mark per ounce of silver.What would the exchange rate between the U.S.dollar and German mark be under this system?

Accepted Answer

A)  1 German mark = $2
B)  1 German mark = $0.50
C)  1 German mark = $3
D)  1 German mark = $1E) A) and C)
F) C) and D)

Question 11

Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace.This situation,in turn,makes it necessary for many firms to

Accepted Answer

A)  carefully manage their exchange risk exposure.
B)  carefully measure their exchange risk exposure.
C)  both a)  and b) D) All of the above
E) A) and C)

Question 12

At the outbreak of World War I

Accepted Answer

A)  major countries such as Great Britain, France, Germany and Russia suspended redemption of banknotes in gold.
B)  major countries such as Great Britain, France, Germany and Russia imposed embargoes on the export of gold.
C)  the classical gold standard was abandoned.
D)  all of the aboveE) B) and C)
F) All of the above

Question 13

Benefits from adopting a common European currency include

Accepted Answer

A)  reduced transaction costs.
B)  elimination of exchange rate risk.
C)  increased price transparency that will promote Europe-wide competition.
D)  all of the aboveE) All of the above
F) A) and B)

Question 14

The Bretton Woods system was named after

Accepted Answer

A)  the treasury secretary of the United States in 1945, Bretton Woods.
B)  Bretton Woods, New Hampshire, where the Articles of Agreement of the International Monetary Fund (IMF)  were hammered out.
C)  none of the above.D) All of the above
E) A) and B)

Question 15

The international monetary system went through several distinct stages of evolution.These stages are summarized,in alphabetic order,as follows: (i) - Bimetallism
(ii) - Bretton Woods system
(iii) - Classical gold standard
(iv) - Flexible exchange rate regime
(v) - Interwar period
The chronological order that they actually occurred is:

Accepted Answer

A)  (iii) , (i) , (iv) , (ii) , and (v) 
B)  (i) , (iii) , (v) , (ii) , and (iv) 
C)  (vi) , (i) , (iii) , (ii) , and (v) 
D)  (v) , (ii) , (i) , (iii) , and (iv) E) A) and B)
F) A) and C)

Question 16

During the period between World War I and World War II,

Accepted Answer

A)  the major European powers and the U.S.returned to the gold standard and fixed exchange rates.
B)  while most countries abandoned the gold standard during World War I, international trade and investment flourished during the interwar period under a coherent international monetary system.
C)  the U.S.dollar emerged as the dominant world currency, gradually replacing the British pound for the role.
D)  None of the above.E) B) and D)
F) None of the above

Question 17

Under the Bretton Woods system,

Accepted Answer

A)  the U.S.dollar was the only currency that was fully convertible to gold; other currencies were not directly convertible to gold.
B)  all currencies of member states were fully convertible to gold.
C)  all currencies of member states were fully convertible to gold or silver.
D)  none of the above.E) B) and C)
F) A) and B)

Question 18

During the period between World War I and World War II,the political reality was characterized by

Accepted Answer

A)  halfhearted attempts and failure to restore the gold standard.
B)  political instabilities and bank failures.
C)  panicky flights of capital across borders.
D)  all of the aboveE) A) and B)
F) C) and D)

Question 19

The Bretton Woods system ended in

Accepted Answer

A)  1945.
B)  1973.
C)  1981.
D)  2001.E) A) and D)
F) B) and D)

Question 20

The advent of the euro marks the first time that sovereign countries have voluntarily given up their

Accepted Answer

A)  national borders to foster economic integration.
B)  monetary independence to foster economic integration.
C)  fiscal policy independence to foster economic integration.
D)  national debt to foster economic integration.E) All of the above
F) A) and B)

Exam 2: International Monetary System

Under the Bretton Woods system,

Correct Answer
verified

The advent of the euro marks the first time that sovereign countries have voluntarily given up their

Correct Answer
verified

During the period between World War I and World War II,the political reality was characterized by

Correct Answer
verified

Put the following in correct date order:

Correct Answer
verified

During the 1990s there

Correct Answer
verified

The Bretton Woods system ended in

Correct Answer
verified

In the 1850s the French franc was valued by both gold and silver,under the official French ratio which equated a gold franc to a silver franc 15½ times as heavy.At the same time,the gold from newly discovered mines in California poured into the market,depressing the value of gold.As a result,

Correct Answer
verified

Correct Answer
verified

Benefits from adopting a common European currency include

Correct Answer
verified

Ecuador does not have its own national currency,circulating the U.S.dollar instead.About how many countries do not have their own national currency?

Correct Answer
verified

At the outbreak of World War I

Correct Answer
verified

Correct Answer
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The Bretton Woods system was named after

Correct Answer
verified

Suppose that Britain pegs the pound to gold at the market price of £6 per ounce,and the United States pegs the dollar to gold at the market price of $36 per ounce.If the official exchange rate between pounds and U.S.dollars is $5 = £1.Which of the following trades is profitable?

Correct Answer
verified

Suppose that the United States is on a bimetallic standard at $30 to one ounce of gold and $2 for one ounce of silver.If new silver mines open and flood the market with silver,

Correct Answer
verified

Correct Answer
verified

Put the following in correct date order:

Correct Answer
verified

The Bretton Woods agreement resulted in the creation of

Correct Answer
verified

During the period between World War I and World War II,

Correct Answer
verified

Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace.This situation,in turn,makes it necessary for many firms to

Correct Answer
verified

Exam 2: International Monetary System

Under the Bretton Woods system,

Correct AnswerverifiedShow Answer

The advent of the euro marks the first time that sovereign countries have voluntarily given up their

Correct AnswerverifiedShow Answer

During the period between World War I and World War II,the political reality was characterized by

Correct AnswerverifiedShow Answer

Put the following in correct date order:

Correct AnswerverifiedShow Answer

During the 1990s there

Correct AnswerverifiedShow Answer

The Bretton Woods system ended in

Correct AnswerverifiedShow Answer

In the 1850s the French franc was valued by both gold and silver,under the official French ratio which equated a gold franc to a silver franc 15½ times as heavy.At the same time,the gold from newly discovered mines in California poured into the market,depressing the value of gold.As a result,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Benefits from adopting a common European currency include

Correct AnswerverifiedShow Answer

Ecuador does not have its own national currency,circulating the U.S.dollar instead.About how many countries do not have their own national currency?

Correct AnswerverifiedShow Answer

At the outbreak of World War I

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The Bretton Woods system was named after

Correct AnswerverifiedShow Answer

Suppose that Britain pegs the pound to gold at the market price of £6 per ounce,and the United States pegs the dollar to gold at the market price of $36 per ounce.If the official exchange rate between pounds and U.S.dollars is $5 = £1.Which of the following trades is profitable?

Correct AnswerverifiedShow Answer

Suppose that the United States is on a bimetallic standard at $30 to one ounce of gold and $2 for one ounce of silver.If new silver mines open and flood the market with silver,

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Put the following in correct date order:

Correct AnswerverifiedShow Answer

The Bretton Woods agreement resulted in the creation of

Correct AnswerverifiedShow Answer

During the period between World War I and World War II,

Correct AnswerverifiedShow Answer

Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace.This situation,in turn,makes it necessary for many firms to

Correct AnswerverifiedShow Answer

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