FIN3551_Chap3 Questions And Answers
1) Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of
gold cost $20.67 in U.S. dollars and £4.2474 in British pounds. Therefore, the exchange rate of
pounds per dollar under this fixed exchange regime was:
A) £4.8665/...
FIN3551_Chap3 Questions And Answers
1) Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of
gold cost $20.67 in U.S. dollars and £4.2474 in British pounds. Therefore, the exchange rate of
pounds per dollar under this fixed exchange regime was:
A) £4.8665/$.
B) £0.2055/$.
C) always changing because the price of gold was always changing.
D) unknown because there is not enough information to answer this question. - correct answersB
2) World War I caused the suspension of the gold standard for fixed international exchange rates
because the war:
A) cost too much money.
B) interrupted the free movement of gold.
C) lasted too long.
D) used gold as the main ingredient in armament plating. - correct answersB
3) The post WWII international monetary agreement that was developed in 1944 is known as
the:
A) United Nations.
B) League of Nations.
C) Yalta Agreement.
D) Bretton Woods Agreement. - correct answersD
4) Another name for the International Bank for Reconstruction and Development is:
A) the Recon Bank.
B) the European Monetary System.
, C) the Marshall Plan.
D) the World Bank. - correct answersD
5) The International Monetary Fund (IMF):
A) in recent years has provided large loans to Russia, South Korea, and Brazil.
B) was created as a result of the Bretton Woods Agreement.
C) aids countries with balance of payment and exchange rate problems.
D) is all of the above. - correct answersD
6) Which of the following led to the eventual demise of the fixed currency exchange rate regime
worked out at Bretton Woods?
A) widely divergent national monetary and fiscal policies among member nations
B) differential rates of inflation across member nations
C) several unexpected economic shocks to member nations
D) all of the above - correct answersD
7) Which of the following statements is NOT true?
A) The Gold Standard Era was characterized by growing openness in trade, but limited capital
mobility.
B) The time period between world wars 1 and 2 (the inter war Years) witnessed significant
reductions in trade barriers and a rapid acceleration in international trade.
C) The Bretton Woods Era (post WWII) realized the increasing benefits of open economies.
Furthermore, trade was increasingly dominated by capital.
D) In fact, all of the above statements are true. - correct answersB
True/False
1) Under the terms of Bretton Woods, countries tried to maintain the value of their currencies to
within 1% of a hybrid security made up of the U.S. dollar, British pound, and Japanese yen. - correct
answersB
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