Question 1

How did interests,institutions,and interactions contribute to the success and failure of the Bretton Woods System?

Accepted Answer

Answers will vary.Students may discuss t

Question 2

What is the Bretton Woods System?

Accepted Answer

A) A monetary system in which the exchange rate of major currencies retained nearly the same value with respect to the U.S.dollar 
B) A monetary system in which the exchange rates of the major currencies remained fixed to gold 
C) A monetary system in which the exchange rate of the U.S.dollar was periodically adjusted in response to currency crises in its allies' economies 
D) A monetary system in which exchange rates were allowed to change according to their market prices 
A) A monetary system in which the exchange rate of major currencies retained nearly the same value with respect to the U.S.dollar 
B) A monetary system in which the exchange rates of the major currencies remained fixed to gold 
C) A monetary system in which the exchange rate of the U.S.dollar was periodically adjusted in response to currency crises in its allies' economies 
D) A monetary system in which exchange rates were allowed to change according to their market prices

Question 3

Which of the following is an international monetary institution?

Accepted Answer

A) The World Trade Organization 
B) The classical gold standard 
C) The German government 
D) The British pound 
A) The World Trade Organization 
B) The classical gold standard 
C) The German government 
D) The British pound

Question 4

What is a national paper currency standard?

Accepted Answer

A) Governments issue a currency and peg its value to gold. 
B) Governments issue a currency and commit to exchanging the currency for a set gold price. 
C) Governments issue a currency and use gold as a standard value but do not commit to exchanging gold for the currency. 
D) Governments issue a currency and commit to supporting the value of the currency. 
A) Governments issue a currency and peg its value to gold. 
B) Governments issue a currency and commit to exchanging the currency for a set gold price. 
C) Governments issue a currency and use gold as a standard value but do not commit to exchanging gold for the currency. 
D) Governments issue a currency and commit to supporting the value of the currency.

Question 5

Why did the Bretton Woods System succeed?

Accepted Answer

A) Fixing all currencies to the unchanging gold standard caused economic prosperity for all of the major countries. 
B) The World Trade Organization facilitated cooperation by providing monetary support during crises. 
C) The economic,political,and military interests of Western nations coincided. 
D) The monetary system received support from both of the superpowers,the United States and the Soviet Union. 
A) Fixing all currencies to the unchanging gold standard caused economic prosperity for all of the major countries. 
B) The World Trade Organization facilitated cooperation by providing monetary support during crises. 
C) The economic,political,and military interests of Western nations coincided. 
D) The monetary system received support from both of the superpowers,the United States and the Soviet Union.

Question 6

What is a floating exchange rate?

Accepted Answer

A) A trading system in which governments do not limit how many goods can be sent between countries 
B) A monetary system in which the exchange rates of currencies are set at a permanent price of gold 
C) A monetary system in which the exchange rates of major currencies retain nearly the same value with respect to gold but are periodically adjusted during currency crises 
D) A monetary system in which exchange rates are allowed to change according to their market prices 
A) A trading system in which governments do not limit how many goods can be sent between countries 
B) A monetary system in which the exchange rates of currencies are set at a permanent price of gold 
C) A monetary system in which the exchange rates of major currencies retain nearly the same value with respect to gold but are periodically adjusted during currency crises 
D) A monetary system in which exchange rates are allowed to change according to their market prices

Question 7

The gold standard is a monetary system in which:

Accepted Answer

A) governments used gold instead of paper currencies. 
B) the exchange rate of the U.S.dollar was periodically adjusted in response to currency crises in its allies' economies. 
C) exchange rates were allowed to change according to their market price. 
D) the exchange rates of the major currencies remained fixed to gold. 
A) governments used gold instead of paper currencies. 
B) the exchange rate of the U.S.dollar was periodically adjusted in response to currency crises in its allies' economies. 
C) exchange rates were allowed to change according to their market price. 
D) the exchange rates of the major currencies remained fixed to gold.

Question 8

Which of the following exchange rate policies would a country trying to encourage exports choose?

Accepted Answer

A) A strong floating exchange rate 
B) A weak floating exchange rate 
C) A strong fixed exchange rate 
D) A weak fixed exchange rate 
A) A strong floating exchange rate 
B) A weak floating exchange rate 
C) A strong fixed exchange rate 
D) A weak fixed exchange rate

Question 9

Why did some potential eurozone countries,such as Lithuania,choose to maintain their peg with the euro while others,like Poland,chose to devalue during the eurozone crisis?

Accepted Answer

A) Lithuania was smaller than Poland and more susceptible to German pressure. 
B) Lithuania traded more with the rest of Europe than Poland and so needed to maintain stable exchange rates. 
C) Lithuania was much more indebted than Poland,and a devaluation would have increased the cost of that debt. 
D) Lithuania had a right-wing government that preferred price stability,while Poland had a left-wing government that cared more about reducing unemployment. 
A) Lithuania was smaller than Poland and more susceptible to German pressure. 
B) Lithuania traded more with the rest of Europe than Poland and so needed to maintain stable exchange rates. 
C) Lithuania was much more indebted than Poland,and a devaluation would have increased the cost of that debt. 
D) Lithuania had a right-wing government that preferred price stability,while Poland had a left-wing government that cared more about reducing unemployment.

Question 10

Why did the East Asian currency crisis of 1997 occur?

Accepted Answer

A) East Asian countries were unwilling to borrow enough international money to build sufficient infrastructure. 
B) As inflation rose in East Asian countries,investors anticipated devaluations and began to sell off East Asian currencies. 
C) Investors were surprised by an abrupt devaluation by the Thai government of its currency and responded by selling their Thai currency. 
D) The Suharto dictatorship in Indonesia collapsed,sparking instability in the region. 
A) East Asian countries were unwilling to borrow enough international money to build sufficient infrastructure. 
B) As inflation rose in East Asian countries,investors anticipated devaluations and began to sell off East Asian currencies. 
C) Investors were surprised by an abrupt devaluation by the Thai government of its currency and responded by selling their Thai currency. 
D) The Suharto dictatorship in Indonesia collapsed,sparking instability in the region.

Question 11

How does the current international monetary system differ from the gold standard and the Bretton Woods System? What effect do these differences have on international monetary relations as well as on domestic policies?

Accepted Answer

Answers will vary.Students may briefly d

Question 12

What is the exchange rate?

Accepted Answer

A) The amount of trade passing from one country to another 
B) The price of a national currency relative to other national currencies 
C) The price of gold 
D) The speed with which currency traders buy and sell currencies 
A) The amount of trade passing from one country to another 
B) The price of a national currency relative to other national currencies 
C) The price of gold 
D) The speed with which currency traders buy and sell currencies

Question 13

Which country did President Trump,during his campaign,threaten to label as a currency manipulator?

Accepted Answer

A) Russia 
B) China 
C) Mexico 
D) Japan 
A) Russia 
B) China 
C) Mexico 
D) Japan

Question 14

Why did the European monetary crisis of 2011 occur?

Accepted Answer

A) A handful of European countries borrowed heavily during an economic boom,and the global financial crisis of 2007 made it difficult to pay off those debts. 
B) Greece,Ireland,Portugal,and Spain never fully adopted the euro,and their preference for a dual currency made investors wary. 
C) Germany wanted to allow countries like Greece,Ireland,Portugal,and Spain to set their own monetary policies. 
D) Countries heavily in debt wanted free monetary policy control so they could appreciate the currency in response to the crisis. 
A) A handful of European countries borrowed heavily during an economic boom,and the global financial crisis of 2007 made it difficult to pay off those debts. 
B) Greece,Ireland,Portugal,and Spain never fully adopted the euro,and their preference for a dual currency made investors wary. 
C) Germany wanted to allow countries like Greece,Ireland,Portugal,and Spain to set their own monetary policies. 
D) Countries heavily in debt wanted free monetary policy control so they could appreciate the currency in response to the crisis.

Question 15

If a 100-euro pair of Italian shoes costs $200,how much would the shoes cost after the dollar appreciated by 100 percent?

Accepted Answer

A) $100 
B) $200 
C) $300 
D) $400 
A) $100 
B) $200 
C) $300 
D) $400

Question 16

Why did the Bretton Woods System end?

Accepted Answer

A) President Richard Nixon decided that the United States could no longer support the system. 
B) The major European countries decided to go on the gold standard. 
C) Prime Minister Winston Churchill decided that Great Britain should stop supporting the system. 
D) The major European countries decided to adopt the euro. 
A) President Richard Nixon decided that the United States could no longer support the system. 
B) The major European countries decided to go on the gold standard. 
C) Prime Minister Winston Churchill decided that Great Britain should stop supporting the system. 
D) The major European countries decided to adopt the euro.

Question 17

Why would a country want a depreciated currency?

Accepted Answer

A) Depreciation makes imports cheaper for consumers. 
B) Depreciation makes a country's exports more competitive. 
C) Depreciation makes foreign loan repayment cheaper. 
D) Depreciation makes wages increase. 
A) Depreciation makes imports cheaper for consumers. 
B) Depreciation makes a country's exports more competitive. 
C) Depreciation makes foreign loan repayment cheaper. 
D) Depreciation makes wages increase.

Question 18

Why do higher interest rates usually lead to currency values increasing?

Accepted Answer

A) Investors need to purchase the domestic currency to invest in that country and collect the higher interest rate. 
B) The higher interest rate leads to inflation,which increases the price of currency together with all other products. 
C) High interest rates encourage people to import more foreign goods,which will lead to more demand for the domestic currency. 
D) Countries usually increase interest rates to fight recessions,and the resulting growth of the economy increases demand for that country's currency. 
A) Investors need to purchase the domestic currency to invest in that country and collect the higher interest rate. 
B) The higher interest rate leads to inflation,which increases the price of currency together with all other products. 
C) High interest rates encourage people to import more foreign goods,which will lead to more demand for the domestic currency. 
D) Countries usually increase interest rates to fight recessions,and the resulting growth of the economy increases demand for that country's currency.

Question 19

Why is it difficult for a government to avoid a currency crisis?

Accepted Answer

A) Important companies that have borrowed in foreign currencies can be a powerful lobby in favor of abrupt devaluations of the currency in order to reduce their debts. 
B) Exporters clamor for the government to maintain overvalued exchange rates when the currency should be devalued. 
C) International investors are easily alarmed by any sign of instability and are quick to sell off currency. 
D) In democracies,government officials have to worry about the votes of consumers who would be hurt by overvalued exchange rates. 
A) Important companies that have borrowed in foreign currencies can be a powerful lobby in favor of abrupt devaluations of the currency in order to reduce their debts. 
B) Exporters clamor for the government to maintain overvalued exchange rates when the currency should be devalued. 
C) International investors are easily alarmed by any sign of instability and are quick to sell off currency. 
D) In democracies,government officials have to worry about the votes of consumers who would be hurt by overvalued exchange rates.

Question 20

Why might a central bank oppose a country moving to a fixed exchange rate?

Accepted Answer

A) Fixed exchange rates limit the ability of central banks to change interest rates to affect the domestic economy. 
B) Fixed exchange rates often lead to higher inflation,which central banks tend to oppose. 
C) Fixed exchange rates force central banks to hold more foreign currency reserves than they would prefer. 
D) Fixed exchange rates increase the risk of private bank failures,which the central bank would need to bail out. 
A) Fixed exchange rates limit the ability of central banks to change interest rates to affect the domestic economy. 
B) Fixed exchange rates often lead to higher inflation,which central banks tend to oppose. 
C) Fixed exchange rates force central banks to hold more foreign currency reserves than they would prefer. 
D) Fixed exchange rates increase the risk of private bank failures,which the central bank would need to bail out.

How did interests,institutions,and interactions contribute to the success and failure of the Bretton Woods System?

What is the Bretton Woods System?

Which of the following is an international monetary institution?

What is a national paper currency standard?

Why did the Bretton Woods System succeed?

What is a floating exchange rate?

The gold standard is a monetary system in which:

Which of the following exchange rate policies would a country trying to encourage exports choose?

Why did some potential eurozone countries,such as Lithuania,choose to maintain their peg with the euro while others,like Poland,chose to devalue during the eurozone crisis?

Why did the East Asian currency crisis of 1997 occur?

How does the current international monetary system differ from the gold standard and the Bretton Woods System? What effect do these differences have on international monetary relations as well as on domestic policies?

What is the exchange rate?

Which country did President Trump,during his campaign,threaten to label as a currency manipulator?

Why did the European monetary crisis of 2011 occur?

If a 100-euro pair of Italian shoes costs $200,how much would the shoes cost after the dollar appreciated by 100 percent?

Why did the Bretton Woods System end?

Why would a country want a depreciated currency?

Why do higher interest rates usually lead to currency values increasing?

Why is it difficult for a government to avoid a currency crisis?

Why might a central bank oppose a country moving to a fixed exchange rate?

What Shaped Our World

Understanding Interests, interactions, and Institutions

Why Are There Wars

Domestic Politics and War

International Institutions and War

Violence by Nonstate Actors: Civil War and Terrorism

International Trade

International Financial Relations

Development: Causes of the Wealth and Poverty of Nations

International Law and Norms

Human Rights

The Global Environment

The Future of International Politics

Introduction

Foundations, War, and Peace

International Political Economy, Transnational Politics, and Looking Ahead

Filters

Exam 9: International Monetary Relations

How did interests,institutions,and interactions contribute to the success and failure of the Bretton Woods System?

What is the Bretton Woods System?

Which of the following is an international monetary institution?

What is a national paper currency standard?

Why did the Bretton Woods System succeed?

What is a floating exchange rate?

The gold standard is a monetary system in which:

Which of the following exchange rate policies would a country trying to encourage exports choose?

Why did some potential eurozone countries,such as Lithuania,choose to maintain their peg with the euro while others,like Poland,chose to devalue during the eurozone crisis?

Why did the East Asian currency crisis of 1997 occur?

How does the current international monetary system differ from the gold standard and the Bretton Woods System? What effect do these differences have on international monetary relations as well as on domestic policies?

What is the exchange rate?

Which country did President Trump,during his campaign,threaten to label as a currency manipulator?

Why did the European monetary crisis of 2011 occur?

If a 100-euro pair of Italian shoes costs $200,how much would the shoes cost after the dollar appreciated by 100 percent?

Why did the Bretton Woods System end?

Why would a country want a depreciated currency?

Why do higher interest rates usually lead to currency values increasing?

Why is it difficult for a government to avoid a currency crisis?

Why might a central bank oppose a country moving to a fixed exchange rate?

What Shaped Our World

Understanding Interests, interactions, and Institutions

Why Are There Wars

Domestic Politics and War

International Institutions and War

Violence by Nonstate Actors: Civil War and Terrorism

International Trade

International Financial Relations

Development: Causes of the Wealth and Poverty of Nations

International Law and Norms

Human Rights

The Global Environment

The Future of International Politics

Introduction

Foundations, War, and Peace

International Political Economy, Transnational Politics, and Looking Ahead

Filters