QUESTION Which of the following statements is true about the gold standard? A. Given a common gold standard, the value of any currency in units of any other currency was easy to determine. B. Establishing a gold standard seemed impractical as the volume of international trade expanded in the wake of the Industrial Revolution. C. […]
QUESTION Which of the following observations about the International Development Association (IDA) scheme of the World Bank is true? A. Money is raised through bond sales in the international capital market. B. Borrowers have up to 50 years to repay at an interest rate of less than 1 percent a year. C. IDA loans go […]
QUESTION Which of the following was a reason that led to the collapse of the gold standard in 1939? A. Difficulty and complexity in using the gold standard to determine the exchange rate B. Agreement by governments to convert paper currency into gold on demand at a fixed rate C. A cycle of competitive currency […]
QUESTION Argonia Republic is in trade surplus with Kamboly. Under the gold standard, which of the following statements is true until a balance-of-trade equilibrium is achieved? A. There will be a net flow of gold from Argonia Republic to Kamboly. B. The money supply in Kamboly will be reduced due to the flow of gold […]
QUESTION In the 1930s, countries were devaluing their currencies at will in order to boost exports, thus shattering confidence in the: A. floating exchange rate system. B. gold standard system. C. fixed exchange system. D. Bretton Woods system. E. managed-float system. ANSWER B
QUESTION Certovia and Norkland are two neighboring countries that actively trade goods and services with each other. Under the gold standard, there will be a net flow of gold from Norkland to Certovia when: A. Certovia is in trade deficit with Norkland. B. Norkland is in balance-of-trade equilibrium with Certovia. C. Certovia is in trade […]
QUESTION All countries were to fix the value of their currency in terms of gold but were not required to exchange their currencies for gold, according to the 1944: A. Bretton Woods agreement. B. Washington Consensus. C. World Bank treaty. D. Group of Five treaty. E. United Nations agreement. ANSWER A
QUESTION The objective of establishing the World Bank was to: A. revive the gold standard. B. promote general economic development. C. control and manage the International Monetary Fund. D. promote a floating exchange rate system. E. approve large currency devaluations. ANSWER B
QUESTION The architects of the Bretton Woods agreement built limited flexibility into the fixed exchange rate system in order to: A. avoid high unemployment. B. facilitate competitive currency devaluations. C. widen balance-of-payments gap between countries. D. increase money supply and thereby price inflation. E. avoid balance-of-trade equilibrium between countries. ANSWER A
QUESTION Which of the following statements is true about the various exchange rate systems? A. In a fixed exchange rate system, the value of a currency is adjusted according to the day to day market forces. B. In a clean float, the central bank of a country will intervene in the foreign exchange market to […]
