Question 1

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. 
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.

Question 2

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

Question 3

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. 
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.

Question 4

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. 
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.

Question 5

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. 
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.

Question 6

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. 
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.

Question 7

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) 
A) carefully manage their exchange risk exposure. 
B) carefully measure their exchange risk exposure. 
C) both a) and b)

Question 8

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. 
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.

Question 9

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. 
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.

Question 10

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 correct 
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 correct

Question 11

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) 40 
A) 10 
B) 20 
C) 30 
D) 40

Question 12

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. 
A) the bancor as an international reserve asset. 
B) the World Bank. 
C) the Eximbank. 
D) the Federal Reserve Bank.

Question 13

The Bretton Woods system ended in

Accepted Answer

A) 1945. 
B) 1973. 
C) 1981. 
D) 2001. 
A) 1945. 
B) 1973. 
C) 1981. 
D) 2001.

Question 14

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. 
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.

Question 15

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

Question 16

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 above 
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 above

Question 17

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 above 
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 above

Question 18

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 crises 
A) were three major currency crises. 
B) were two major currency crises. 
C) was only one currency crisis. 
D) were no major currency crises

Question 19

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) 
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)

Question 20

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 above 
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 above

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

Benefits from adopting a common European currency include

Under the Bretton Woods system,

The Bretton Woods system was named after

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?

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

Put the following in correct date order:

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

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,

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?

The Bretton Woods agreement resulted in the creation of

The Bretton Woods system ended in

Put the following in correct date order:

At the outbreak of World War I

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,

During the 1990s there

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

Globalization and the Multinational Firm

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters

Exam 2: International Monetary System

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

Benefits from adopting a common European currency include

Under the Bretton Woods system,

The Bretton Woods system was named after

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?

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

Put the following in correct date order:

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

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,

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?

The Bretton Woods agreement resulted in the creation of

The Bretton Woods system ended in

Put the following in correct date order:

At the outbreak of World War I

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,

During the 1990s there

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

Globalization and the Multinational Firm

Balance of Payments

Corporate Governance Around the World

The Market for Foreign Exchange

International Parity Relationships and Forecasting Foreign Exchange Rates

Futures and Options on Foreign Exchange

Management of Transaction Exposure

Management of Economic Exposure

Management of Translation Exposure

International Banking and Money Market

International Bond Market

International Equity Markets

Interest Rate and Currency Swaps

International Portfolio Investment

Foreign Direct Investment and Cross-Border Acquisitions

International Capital Structure and the Cost of Capital

International Capital Budgeting

Multinational Cash Management

International Trade Finance

International Tax Environment and Transfer Pricing

Filters