Question 1

Bretton-Woods system:

Accepted Answer

A) is an example of a fixed exchange rate regime 
B) is an example of a flexible exchange rate regime 
C) gave birth to the introduction of the Euro 
D) was used to smooth transition from bimetallism to the classical gold standard 
A) is an example of a fixed exchange rate regime 
B) is an example of a flexible exchange rate regime 
C) gave birth to the introduction of the Euro 
D) was used to smooth transition from bimetallism to the classical gold standard A

Question 2

The international monetary system can be defined as the institutional framework within which:

Accepted Answer

A) international payments are made 
B) movements of capital are accommodated 
C) exchange rates among currencies are determined 
D) all of these 
A) international payments are made 
B) movements of capital are accommodated 
C) exchange rates among currencies are determined 
D) all of these D

Question 3

The European Monetary System (EMS)has the following objectives:

Accepted Answer

A) To establish a "zone of monetary stability" in Europe 
B) To coordinate exchange rate policies vis-à-vis the non EMS currencies 
C) To pave the way for the eventual European Monetary Union 
D) All of these 
A) To establish a "zone of monetary stability" in Europe 
B) To coordinate exchange rate policies vis-à-vis the non EMS currencies 
C) To pave the way for the eventual European Monetary Union 
D) All of these D

Question 4

If,under the Gold Standard,the price of 1oz of gold was $15 or £5,what was the $/£ exchange rate?

Accepted Answer

A) 0.25 $/£ 
B) 0.33 $/£ 
C) 1 $/£ 
D) 3 $/£ 
A) 0.25 $/£ 
B) 0.33 $/£ 
C) 1 $/£ 
D) 3 $/£

Question 5

The Chinese renminbi is currently pegged to the US dollar at a rate of 8.28 to 1.The renminbi is considered to be undervalued (that is the exchange rate should be lower).Graphically illustrate the external adjustment mechanism.What happens to the Chinese foreign exchange reserves?

Accepted Answer

@#IMG-DLM& At an exchange rate of renmin

Question 6

Can all of the following three conditions:
(1)fixed exchange rate,
(2)free international flow of capital,and
(3)independent monetary policy
Be satisfied simultaneously?
 Why?
.

Accepted Answer

A country can attain only two of these t

Question 7

Before World War I,$20.67 was needed to buy one ounce of gold and FF 310.00 would also buy one ounce of gold.What was the exchange rate between the French franc and the US dollar?

Accepted Answer

A) FF0.0667/$ 
B) FF14.976/$ 
C) FF6407.7/$ 
D) $6407.7/FF 
A) FF0.0667/$ 
B) FF14.976/$ 
C) FF6407.7/$ 
D) $6407.7/FF

Question 8

Comparing the Euro-12 and the United States,which of the following statements is true?

Accepted Answer

A) The United States has a larger population than the Euro-12. 
B) The United States has a larger GDP than the Euro-12. 
C) Euro -12 has a larger share of World Trade than the United States. 
D) Euro -12 has less international bonds outstanding than the United States. 
A) The United States has a larger population than the Euro-12. 
B) The United States has a larger GDP than the Euro-12. 
C) Euro -12 has a larger share of World Trade than the United States. 
D) Euro -12 has less international bonds outstanding than the United States.

Question 9

Suppose that the British pound is pegged to gold at £6 per ounce and one ounce of gold is worth FF12.The exchange rate is FF1.8/£ and you have FF11,000.How much profit can you make?
 (Assume zero shipping costs).

Accepted Answer

Exchange FF to £ at current exchange rat

Question 10

Which of the following is a cost of a Monetary Union:

Accepted Answer

A) Loss of national monetary policy independence 
B) Loss of exchange rate uncertainty 
C) Increased transaction costs 
D) Loss of efficiency 
A) Loss of national monetary policy independence 
B) Loss of exchange rate uncertainty 
C) Increased transaction costs 
D) Loss of efficiency

Question 11

The Argentine peso was pegged to the US dollar at a rate of 1 to 1 until January 17,2002.Argentina experienced trade deficits in prior to the collapse of the currency board.Graphically illustrate the external adjustment mechanism.

Accepted Answer

The answer of The Argentine peso was pegged to the...

Question 12

Which of the following is NOT a benefit of a monetary union?

Accepted Answer

A) Elimination of exchange rate uncertainty 
B) Reduced transactions costs 
C) Ability to absorb economic shocks 
D) Enhanced efficiency and competitiveness 
A) Elimination of exchange rate uncertainty 
B) Reduced transactions costs 
C) Ability to absorb economic shocks 
D) Enhanced efficiency and competitiveness

Question 13

Before World War I,GBP 2.2474 was needed to buy one ounce of gold.FF 310.00 would also buy one ounce of gold.What was the exchange rate between the French franc and the British Pound?

Accepted Answer

FF310/GBP2

Question 14

The key arguments for flexible exchange rates are:

Accepted Answer

A) Easier external adjustments and national policy autonomy 
B) Easier internal adjustments and national policy autonomy 
C) Easier external adjustments and easier international trade 
D) Easier internal adjustments and easier international trade 
A) Easier external adjustments and national policy autonomy 
B) Easier internal adjustments and national policy autonomy 
C) Easier external adjustments and easier international trade 
D) Easier internal adjustments and easier international trade

Question 15

Suppose that the British pound is pegged to gold at £6 per ounce,whereas one ounce of gold is worth FF12.Under the gold standard,any misalignment of the exchange rate will be automatically corrected by cross border flows of gold.Calculate the possible savings for buying FF1,000,if the British pound becomes undervalued and trades for FF1.80.(Assume zero shipping costs). (Hint:
Gold is first purchased using the devalued British pound from the Bank of England,then shipped to France and sold for FF1,000 to the Bank of France).

Accepted Answer

A) £55.56 
B) £65.56 
C) £75.56 
D) £85.56 
A) £55.56 
B) £65.56 
C) £75.56 
D) £85.56

Question 16

It is said that the gold-system was programmed to collapse in the long run.To satisfy the growing need for reserves,the United States had to run balance-of-payments deficits continuously.Yet,if the United States ran perennial balance-of-payments deficits,if would eventually impair the public confidence in the dollar.This dilemma I known as the

Accepted Answer

A) Triffin paradox 
B) Triffin dilemma 
C) Mundell paradox 
D) Mundell dilemma 
A) Triffin paradox 
B) Triffin dilemma 
C) Mundell paradox 
D) Mundell dilemma

Question 17

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 18

The euro currently in use is the common currency of

Accepted Answer

A) 11 EU member countries 
B) 12 EU member countries 
C) all EU member countries 
D) all European countries 
A) 11 EU member countries 
B) 12 EU member countries 
C) all EU member countries 
D) all European countries

Question 19

Which of the following is NOT a responsibility of the European System of Central Banks:

Accepted Answer

A) To define and implement the common monetary policy of the Union 
B) To define and implement the common fiscal policy of the Union 
C) To conduct foreign exchange operations 
D) To hold and manage the official foreign exchange reserves of the euro member states 
A) To define and implement the common monetary policy of the Union 
B) To define and implement the common fiscal policy of the Union 
C) To conduct foreign exchange operations 
D) To hold and manage the official foreign exchange reserves of the euro member states

Question 20

A "good" (or ideal)international monetary system should provide:

Accepted Answer

A) liquidity, elasticity, and flexibility 
B) elasticity, sensitivity, and reliability 
C) liquidity, adjustments, and confidence 
D) none of these 
A) liquidity, elasticity, and flexibility 
B) elasticity, sensitivity, and reliability 
C) liquidity, adjustments, and confidence 
D) none of these

Bretton-Woods system:

The international monetary system can be defined as the institutional framework within which:

The European Monetary System (EMS)has the following objectives:

If,under the Gold Standard,the price of 1oz of gold was $15 or £5,what was the $/£ exchange rate?

The Chinese renminbi is currently pegged to the US dollar at a rate of 8.28 to 1.The renminbi is considered to be undervalued (that is the exchange rate should be lower).Graphically illustrate the external adjustment mechanism.What happens to the Chinese foreign exchange reserves?

Can all of the following three conditions: (1)fixed exchange rate, (2)free international flow of capital,and (3)independent monetary policy Be satisfied simultaneously? Why? .

Before World War I,$20.67 was needed to buy one ounce of gold and FF 310.00 would also buy one ounce of gold.What was the exchange rate between the French franc and the US dollar?

Comparing the Euro-12 and the United States,which of the following statements is true?

Suppose that the British pound is pegged to gold at £6 per ounce and one ounce of gold is worth FF12.The exchange rate is FF1.8/£ and you have FF11,000.How much profit can you make? (Assume zero shipping costs).

Which of the following is a cost of a Monetary Union:

The Argentine peso was pegged to the US dollar at a rate of 1 to 1 until January 17,2002.Argentina experienced trade deficits in prior to the collapse of the currency board.Graphically illustrate the external adjustment mechanism.

Which of the following is NOT a benefit of a monetary union?

Before World War I,GBP 2.2474 was needed to buy one ounce of gold.FF 310.00 would also buy one ounce of gold.What was the exchange rate between the French franc and the British Pound?

The key arguments for flexible exchange rates are:

The euro currently in use is the common currency of

Which of the following is NOT a responsibility of the European System of Central Banks:

A "good" (or ideal)international monetary system should provide:

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

Bretton-Woods system:

The international monetary system can be defined as the institutional framework within which:

The European Monetary System (EMS)has the following objectives:

If,under the Gold Standard,the price of 1oz of gold was $15 or £5,what was the $/£ exchange rate?

The Chinese renminbi is currently pegged to the US dollar at a rate of 8.28 to 1.The renminbi is considered to be undervalued (that is the exchange rate should be lower).Graphically illustrate the external adjustment mechanism.What happens to the Chinese foreign exchange reserves?

Can all of the following three conditions: (1)fixed exchange rate, (2)free international flow of capital,and (3)independent monetary policy Be satisfied simultaneously? Why? .

Before World War I,$20.67 was needed to buy one ounce of gold and FF 310.00 would also buy one ounce of gold.What was the exchange rate between the French franc and the US dollar?

Comparing the Euro-12 and the United States,which of the following statements is true?

Suppose that the British pound is pegged to gold at £6 per ounce and one ounce of gold is worth FF12.The exchange rate is FF1.8/£ and you have FF11,000.How much profit can you make? (Assume zero shipping costs).

Which of the following is a cost of a Monetary Union:

The Argentine peso was pegged to the US dollar at a rate of 1 to 1 until January 17,2002.Argentina experienced trade deficits in prior to the collapse of the currency board.Graphically illustrate the external adjustment mechanism.

Which of the following is NOT a benefit of a monetary union?

Before World War I,GBP 2.2474 was needed to buy one ounce of gold.FF 310.00 would also buy one ounce of gold.What was the exchange rate between the French franc and the British Pound?

The key arguments for flexible exchange rates are:

The euro currently in use is the common currency of

Which of the following is NOT a responsibility of the European System of Central Banks:

A "good" (or ideal)international monetary system should provide:

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