Question 1

Gold par value refers to the _____.

Accepted Answer

A)   ratio of price of gold in a currency to price of gold in U.S. dollars
B)   amount of a currency needed to purchase one ounce of gold
C)   ratio of price of gold in a currency to price of gold in euros
D)   amount of gold required to equal the reference currency that a nation is usingE) B) and D)
F) C) and D)

Question 2

Moral hazard arises when people behave recklessly because _____.

Accepted Answer

A)   of the restrictions that exist in a country's monetary policy
B)   of the restrictions that IMF has imposed on them
C)   they know they will be saved if things go wrong
D)   they face financial difficulties arising out of external factorsE) A) and B)
F) B) and C)

Question 3

Firms should not utilize the forward exchange market when they are faced with uncertainty about the future value of currencies.

Accepted Answer

A) True 
 B)False

Question 4

_____ exchange rates were declared as acceptable in the Jamaica agreement of IMF.

Accepted Answer

A)   Pegged
B)   Fixed
C)   Floating
D)   Gold standardE) All of the above
F) A) and B)

Question 5

Contracting out manufacturing allows companies to reduce economic exposure because _____.

Accepted Answer

A)   having multiple suppliers attracts subsidies from government
B)   it reduces the pressure on them to maintain a trade surplus
C)   it allows companies to shift suppliers from country to country
D)   quality issues are insignificant when manufacturing is contracted to othersE) A) and B)
F) C) and D)

Question 6

Which of the following statements is true of the Gold standard?

Accepted Answer

A)   Gold standard was adopted only by the smaller nations of the world.
B)   Currencies were pegged to gold under the gold standard.
C)   Convertibility to gold was not guaranteed under the gold standard.
D)   Gold standard was not helpful in maintaining balance-of-trade equilibrium.E) A) and D)
F) B) and C)

Question 7

Which of the following will help a company hedge against currency fluctuations?

Accepted Answer

A)   Finding a large supplier to supply all the raw materials
B)   In-house manufacturing of raw materials
C)   Basing business in a single country
D)   Dispersing production to different geographic locationsE) A) and C)
F) None of the above

Question 8

A pegged exchange rate means the value of a currency is fixed relative to a reference currency.

Accepted Answer

A) True 
 B)False

Question 9

Exchange rates are determined by the government under a pure "free float" system.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following observations is true of the Bretton Woods agreement?

Accepted Answer

A)   All countries agreed to fix the value of their currency in terms of gold under the agreement.
B)   The system accepted Pound as the official reference currency against gold.
C)   The agreement established a floating system of monetary exchange.
D)   Two multinational institutions, World Economic Forum and WTO, were formed under the agreement.E) All of the above
F) A) and D)

Question 11

The monetary autonomy argument is supported by the advocates of fixed exchange rates.

Accepted Answer

A) True 
 B)False

Question 12

After World War II,world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate.This is an example of a _____ system.

Accepted Answer

A)   fixed exchange rate
B)   dirty float exchange
C)   pegged exchange rate
D)   floating exchange rateE) A) and B)
F) All of the above

Question 13

What is the Bretton Woods agreement? How was it different from the gold standard?

Accepted Answer

The Bretton Woods agreement,signed in 19...

Question 14

Which of the following is an advantage of using the gold standard?

Accepted Answer

A)   The standard makes sure that goods are not priced out from markets due to inflation.
B)   The standard does not require a commitment from nations to maintain its currency's value.
C)   The standard effectively prevents the devaluation of currencies across the world.
D)   It contains a powerful mechanism for achieving balance-of-trade equilibrium by all countries.E) A) and D)
F) A) and C)

Question 15

Compare and contrast a pegged exchange system with a dirty float system of exchange rates.

Accepted Answer

A pegged exchange rate means the value o...

Question 16

A dirty float refers to a situation in which _____.

Accepted Answer

A)   a set of currencies are fixed against each other at some mutually agreed on exchange rate
B)   many countries join hands to form a monetary system and an exchange rate
C)   more than one foreign currency is used as the formal reference for a country's currency
D)   a country tries to hold its currency against an important reference currency without a formal pegged rateE) None of the above
F) All of the above

Question 17

Adopting a pegged exchange rate regime increases the inflationary pressures in a country.

Accepted Answer

A) True 
 B)False

Question 18

Discuss the pegged exchange rate regime.

Accepted Answer

Under a pegged exchange rate regime,a co...

Question 19

When the foreign exchange market determines the relative value of a currency,we say that the country is adhering to a _____ regime.

Accepted Answer

A)   currency board exchange
B)   pegged exchange rate
C)   fixed exchange rate
D)   floating exchange rateE) B) and C)
F) C) and D)

Question 20

Discuss the arguments that favor a floating exchange rate system against a fixed exchange rate system.

Accepted Answer

There are two main elements in the case ...

Exam 11: The International Monetary System

Moral hazard arises when people behave recklessly because _____.

Correct AnswerverifiedShow Answer

Firms should not utilize the forward exchange market when they are faced with uncertainty about the future value of currencies.

Correct AnswerverifiedShow Answer

Which of the following observations is true of the Bretton Woods agreement?

Correct AnswerverifiedShow Answer

Which of the following statements is true of the Gold standard?

Correct AnswerverifiedShow Answer

The monetary autonomy argument is supported by the advocates of fixed exchange rates.

Correct AnswerverifiedShow Answer

Discuss the pegged exchange rate regime.

Correct AnswerverifiedUnder a pegged exchange rate regime,a co...View AnswerShow Answer

When the foreign exchange market determines the relative value of a currency,we say that the country is adhering to a _____ regime.

Correct AnswerverifiedShow Answer

A dirty float refers to a situation in which _____.

Correct AnswerverifiedShow Answer

After World War II,world's major industrial nations arranged their currencies against each other at a mutually agreed on exchange rate.This is an example of a _____ system.

Correct AnswerverifiedShow Answer

What is the Bretton Woods agreement? How was it different from the gold standard?

Correct AnswerverifiedThe Bretton Woods agreement,signed in 19...View AnswerShow Answer

Which of the following is an advantage of using the gold standard?

Correct AnswerverifiedShow Answer

Which of the following will help a company hedge against currency fluctuations?

Correct AnswerverifiedShow Answer

Compare and contrast a pegged exchange system with a dirty float system of exchange rates.

Correct AnswerverifiedA pegged exchange rate means the value o...View AnswerShow Answer

Contracting out manufacturing allows companies to reduce economic exposure because _____.

Correct AnswerverifiedShow Answer

Discuss the arguments that favor a floating exchange rate system against a fixed exchange rate system.

Correct AnswerverifiedThere are two main elements in the case ...View AnswerShow Answer

Adopting a pegged exchange rate regime increases the inflationary pressures in a country.

Correct AnswerverifiedShow Answer

A pegged exchange rate means the value of a currency is fixed relative to a reference currency.

Correct AnswerverifiedShow Answer

Exchange rates are determined by the government under a pure "free float" system.

Correct AnswerverifiedShow Answer

Gold par value refers to the _____.

Correct AnswerverifiedShow Answer

_____ exchange rates were declared as acceptable in the Jamaica agreement of IMF.

Correct AnswerverifiedShow Answer

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Under a pegged exchange rate regime,a co...
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The Bretton Woods agreement,signed in 19...
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A pegged exchange rate means the value o...
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Correct Answer
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Correct Answer
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There are two main elements in the case ...
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Correct Answer
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Correct Answer
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Correct Answer
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