Question 1

The Maastricht Treaty

Accepted Answer

A) irrevocably fixed exchange rates among the member currencies. 
B) commits the members of the European Union to political union as well as monetary union. 
C) was signed and subsequently ratified by the 12 member states. 
D) all of the above 
A) irrevocably fixed exchange rates among the member currencies. 
B) commits the members of the European Union to political union as well as monetary union. 
C) was signed and subsequently ratified by the 12 member states. 
D) all of the above

Question 2

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 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

The monetary system of bimetallism is unstable.Due to the fluctuation of the commercial value of the metals,

Accepted Answer

A) the metal with a commercial value lower than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law). 
B) the metal with a commercial value higher than the currency value tends to be used as money (Gresham's Law). 
C) the metal with a commercial value higher than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law). 
D) none of the above 
A) the metal with a commercial value lower than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law). 
B) the metal with a commercial value higher than the currency value tends to be used as money (Gresham's Law). 
C) the metal with a commercial value higher than the currency value tends to be used as metal and is withdrawn from circulation as money (Gresham's Law). 
D) none of the above

Question 5

Advantages of a flexible exchange rate include which of the following?

Accepted Answer

A) National policy autonomy 
B) Easier external adjustments 
C) The government can use monetary and fiscal policies to pursue whatever economic goals it chooses. 
D) All of the above 
A) National policy autonomy 
B) Easier external adjustments 
C) The government can use monetary and fiscal policies to pursue whatever economic goals it chooses. 
D) All of the above

Question 6

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

Accepted Answer

A) international payments are made. 
B) movement of capital is accommodated. 
C) exchange rates among currencies are determined. 
D) all of the above 
A) international payments are made. 
B) movement of capital is accommodated. 
C) exchange rates among currencies are determined. 
D) all of the above

Question 7

The Asian Currency Crisis

Accepted Answer

A) happened just prior to the Mexican peso crisis. 
B) turned out to be far more serious than the Mexican peso crisis in terms of the extent of contagion. 
C) was limited to Asian currencies. 
D) was almost over before anyone outside the pacific rim noticed. 
A) happened just prior to the Mexican peso crisis. 
B) turned out to be far more serious than the Mexican peso crisis in terms of the extent of contagion. 
C) was limited to Asian currencies. 
D) was almost over before anyone outside the pacific rim noticed.

Question 8

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 6 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 9

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 10

On January 1,1999,an epochal event took place in the arena of international finance when

Accepted Answer

A) all EU countries adopted a common currency called the euro. 
B) eight of 15 EU countries adopted a common currency called the euro. 
C) nine of 15 EU countries adopted a common currency called the euro. 
D) eleven of 15 EU countries adopted a common currency called the euro. 
A) all EU countries adopted a common currency called the euro. 
B) eight of 15 EU countries adopted a common currency called the euro. 
C) nine of 15 EU countries adopted a common currency called the euro. 
D) eleven of 15 EU countries adopted a common currency called the euro.

Question 11

Suppose that both gold and silver are used as international means of payment and the exchange rates among currencies are determined by either their gold or silver contents.Suppose that the dollar was pegged to gold at $20 per ounce,the Japanese yen is pegged to gold at 120,000 yen per ounce and to silver at 8,000 yen per ounce of silver,and the Australian dollar is pegged to silver at $5 per ounce of silver.What would the exchange rate between the U.S.dollar and Australian dollar be under this system?

Accepted Answer

A) $1 U.S.= $1 Australian 
B) $1 U.S.= $2 Australian 
C) $1 U.S.= $3 Australian 
D) None of the above 
A) $1 U.S.= $1 Australian 
B) $1 U.S.= $2 Australian 
C) $1 U.S.= $3 Australian 
D) None of the above

Question 12

Monetary policy for the countries using the euro as a currency is now conducted by

Accepted Answer

A) the Federal Reserve. 
B) the Bundesbank. 
C) European Central Bank. 
D) none of the above 
A) the Federal Reserve. 
B) the Bundesbank. 
C) European Central Bank. 
D) none of the above

Question 13

During the period between World War I and World War II,many central banks followed a policy of sterilization of gold

Accepted Answer

A) by restricting the rate of growth in the supply of gold. 
B) by matching inflows and outflows of gold respectively with reductions and increases in domestic money and credit. 
C) by matching inflows and outflows of gold respectively with increases and reductions in domestic money and credit. 
D) none of the above. 
A) by restricting the rate of growth in the supply of gold. 
B) by matching inflows and outflows of gold respectively with reductions and increases in domestic money and credit. 
C) by matching inflows and outflows of gold respectively with increases and reductions in domestic money and credit. 
D) none of the above.

Question 14

Under a gold standard,if Britain exported more to France than France exported to Great Britain,

Accepted Answer

A) such international imbalances of payment will be corrected automatically. 
B) this type of imbalance will not be able to persist indefinitely. 
C) net export from Britain will be accompanied by a net flow of gold in the opposite direction. 
D) all of the above 
A) such international imbalances of payment will be corrected automatically. 
B) this type of imbalance will not be able to persist indefinitely. 
C) net export from Britain will be accompanied by a net flow of gold in the opposite direction. 
D) all of the above

Question 15

The gold standard still has ardent supporters who believe that it provides

Accepted Answer

A) an effective hedge against price inflation. 
B) fixed exchange rates between all currencies. 
C) monetary policy autonomy. 
D) all of the above 
A) an effective hedge against price inflation. 
B) fixed exchange rates between all currencies. 
C) monetary policy autonomy. 
D) all of the above

Question 16

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 17

Following the introduction of the euro,the national central banks of the euro-12 nations

Accepted Answer

A) disbanded. 
B) formed the ESCB, which is analogous to the Federal Reserve System in the U.S. 
C) continue to perform important functions in their jurisdictions. 
D) b and c are correct 
A) disbanded. 
B) formed the ESCB, which is analogous to the Federal Reserve System in the U.S. 
C) continue to perform important functions in their jurisdictions. 
D) b and c are correct

Question 18

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 19

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 20

Generally speaking,a country would be more prone to asymmetric shocks

Accepted Answer

A) the more diversified and less trade-dependent its economy is. 
B) the less diversified and more trade-dependent its economy is. 
C) the less diversified and less trade-dependent its economy is. 
D) the more diversified and more trade-dependent its economy is. 
A) the more diversified and less trade-dependent its economy is. 
B) the less diversified and more trade-dependent its economy is. 
C) the less diversified and less trade-dependent its economy is. 
D) the more diversified and more trade-dependent its economy is.

The Maastricht Treaty

Under the Bretton Woods system,

The monetary system of bimetallism is unstable.Due to the fluctuation of the commercial value of the metals,

Advantages of a flexible exchange rate include which of the following?

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

The Asian Currency Crisis

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

On January 1,1999,an epochal event took place in the arena of international finance when

Monetary policy for the countries using the euro as a currency is now conducted by

During the period between World War I and World War II,many central banks followed a policy of sterilization of gold

Under a gold standard,if Britain exported more to France than France exported to Great Britain,

The gold standard still has ardent supporters who believe that it provides

During the 1990s there

Following the introduction of the euro,the national central banks of the euro-12 nations

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,

The Bretton Woods system ended in

Generally speaking,a country would be more prone to asymmetric shocks

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

The Maastricht Treaty

Under the Bretton Woods system,

The monetary system of bimetallism is unstable.Due to the fluctuation of the commercial value of the metals,

Advantages of a flexible exchange rate include which of the following?

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

The Asian Currency Crisis

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

On January 1,1999,an epochal event took place in the arena of international finance when

Monetary policy for the countries using the euro as a currency is now conducted by

During the period between World War I and World War II,many central banks followed a policy of sterilization of gold

Under a gold standard,if Britain exported more to France than France exported to Great Britain,

The gold standard still has ardent supporters who believe that it provides

During the 1990s there

Following the introduction of the euro,the national central banks of the euro-12 nations

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,

The Bretton Woods system ended in

Generally speaking,a country would be more prone to asymmetric shocks

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