International Monetary SystemMultiple Choice Questions.doc
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1、Lecture 2 - International Monetary System2-1 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website,
2、in whole or part.Lecture 2 (Chapter 2) International Monetary SystemMultiple Choice Questions1. The international monetary system can be defined as the institutional framework within which A. international payments are made. B. movement of capital is accommodated. C. exchange rates among currencies
3、are determined. D. all of the above2. Corporations today are operating in an environment in which exchange rate changes may adversely affect their competitive positions in the marketplace. This situation, in turn, makes it necessary for many firms to A. carefully manage their exchange risk exposure.
4、 B. carefully measure their exchange risk exposure. C. both a) and b)3. The international monetary system went through several distinct stages of evolution. These stages are summarized, in alphabetic order, as follows:(i)- Bimetallism (ii)- Bretton Woods system (iii)- Classical gold standard (iv)- F
5、lexible exchange rate regime (v)- Interwar periodThe chronological order that they actually occurred is: A. (iii), (i), (iv), (ii), and (v) B. (i), (iii), (v), (ii), and (iv) C. (vi), (i), (iii), (ii), and (v) D. (v), (ii), (i), (iii), and (iv)Lecture 2 - International Monetary System2-2 2012 by McG
6、raw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.4. In the United States, bimetallism wa
7、s adopted by the Coinage Act of 1792 and remained a legal standard until 1873, A. when Congress dropped the silver dollar from the list of coins to be minted. B. when Congress dropped the twenty-dollar gold piece from the list of coins to be minted. C. when gold from the California gold rush drove s
8、ilver out of circulation. D. when gold from the California gold rush drove gold out of circulation.5. The monetary system of bimetallism is unstable. Due to the fluctuation of the commercial value of the metals, A. the metal with a commercial value lower than the currency value tends to be used as m
9、etal and is withdrawn from circulation as money (Greshams Law). B. the metal with a commercial value higher than the currency value tends to be used as money (Greshams Law). C. the metal with a commercial value higher than the currency value tends to be used as metal and is withdrawn from circulatio
10、n as money (Greshams Law). D. none of the above6. In the 1850s the French franc was valued by both gold and silver, under the official French ratio which equated a gold franc to a silver franc 15 times as heavy. At the same time, the gold from newly discovered mines in California poured into the mar
11、ket, depressing the value of gold. As a result, A. the franc effectively became a silver currency. B. the franc effectively became a gold currency. C. silver became overvalued under the French official ratio. D. answers a) and c) are correct7. Greshams Law states that A. bad money drives good money
12、out of circulation. B. good money drives bad money out of circulation. C. if a country bases its currency on both gold and silver, at an official exchange rate, it will be the more valuable of the two metals that circulate. D. none of the above.Lecture 2 - International Monetary System2-3 2012 by Mc
13、Graw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.8. Suppose that the pound is pegged to
14、 gold at 20 per ounce and the dollar is pegged to gold at $35 per ounce. This implies an exchange rate of $1.75 per pound. If the current market exchange rate is $1.80 per pound, how would you take advantage of this situation? Hint: assume that you have $350 available for investment. A. Start with $
15、350. Buy 10 ounces of gold with dollars at $35 per ounce. Convert the gold to 200 at 20 per ounce. Exchange the 200 for dollars at the current rate of $1.80 per pound to get $360. B. Start with $350. Exchange the dollars for pounds at the current rate of $1.80 per pound. Buy gold with pounds at 20 p
16、er ounce. Convert the gold to dollars at $35 per ounce. C. a) and b) both work D. None of the above9. Suppose that the pound is pegged to gold at 20 per ounce and the dollar is pegged to gold at $35 per ounce. This implies an exchange rate of $1.75 per pound. If the current market exchange rate is $
17、1.60 per pound, how would you take advantage of this situation? Hint: assume that you have $350 available for investment. A. Start with $350. Buy 10 ounces of gold with dollars at $35 per ounce. Convert the gold to 200 at 20 per ounce. Exchange the 200 for dollars at the current rate of $1.80 per po
18、und to get $360. B. Start with $350. Exchange the dollars for pounds at the current rate of $1.60 per pound. Buy gold with pounds at 20 per ounce. Convert the gold to dollars at $35 per ounce. C. a) and b) both work D. None of the above10. Suppose that the United States is on a bimetallic standard a
19、t $30 to one ounce of gold and $2 for one ounce of silver. If new silver mines open and flood the market with silver, 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 curren
20、cy at any time. D. none of the aboveLecture 2 - International Monetary System2-4 2012 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, d
21、istributed, or posted on a website, in whole or part.11. 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). I
22、f the market price of gold is only eight times as much as silver. 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.12. Prior to the 1870s, both gold and silver were used a
23、s 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 9 francs per ounce of silver, and
24、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? A. 1 German mark = $2 B. 1 German mark = $0.50 C. 1 German mark = $3 D. 1 German mark = $113. Prior to the 1870s, both gold and silver were used
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