Exam 2: International Monetary System

Suppose that Britain pegs the pound to gold at six pounds per ounce, whereas the exchange rate between pounds and U.S. dollars is $5 = £1. What should an ounce of gold be worth in U.S. dollars?

The first full-fledged gold standard

The Bretton Woods system was named after

Under the Bretton Woods system,

Suppose that the British pound is pegged to gold at £6 per ounce, whereas one ounce of gold is worth €12. Under the gold standard, any misalignment of the exchange rate will be automatically corrected by cross border flows of gold. Calculate the possible gains for buying €1,000, if the British pound becomes undervalued and trades for €1.80. (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 €1,000 to the Bank of France).

During the 1990s there

Put the following in correct date order:

Under a purely flexible exchange rate system

The main cost of European monetary union is

The Mexican Peso Crisis was touched off by

Under the Bretton Woods system

Advantages of a fixed exchange rates include

In the EU, there is a

Since the SDR is a "portfolio" of currencies

Under the gold standard, international imbalances of payment will be corrected automatically under the

To avoid currency crisis in the face of fully integrated capital markets, a country can have a

An "international" gold standard can be said to exist when

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?

Prior to the Argentine Peso Crisis

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