18. Which of the following statements is TRUE? A) Under a gold standard, each country fixes the price of its currency in terms of gold by standing ready to trade domestic currency for gold whenever necessary to defend the official price. B) Under a gold standard, each country is not responsible for pegging its currency's price in terms of the official international reserve asset, gold. C) Under a gold standard, countries with limited gold reserves cannot participate. D) Under a gold standard, all countries sets the same price of its currency in terms of gold.

18. Which of the following statements is TRUE? A) Under a gold standard, each country fixes the price of its currency in terms of gold by standing ready to trade domestic currency for gold whenever necessary to defend the official price. B) Under a gold standard, each country is not responsible for pegging its currency's price in terms of the official international reserve asset, gold. C) Under a gold standard, countries with limited gold reserves cannot participate. D) Under a gold standard, all countries sets the same price of its currency in terms of gold.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter29: International Finance

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

Is a country for which imports and exports comprise a large fraction of the GDP more likely to adopt a flexible exchange rate or a fixed (hard peg) exchange rate?
How will a stronger euro affect the following economic agents? A British exporter to Germany. A Dutch tourist visiting Chile. A Greek bank investing in a Canadian government bond. A French exporter to Germany.
Why would a nation dollarizeâ€”that is, adopt another countrys currency instead of having its own?
Do all international financial transactions necessarily involve exchanging one nation’s distinct currency for another? Explain. Could a nation that neither imports goods and services nor exports goods and services still engage in international financial transactions?
please kindly assist with the following QnA Openness of an economy is: (a) the extent to which a country is involved in international trade and finance. (b) the degree to which a country generates its economic growth.(c) the degree to which a country generates its income.(d) the extent to which a country is involved in tourism.Q.1.11 What is a foreign exchange rate? (2) (a) The rate at which the currency of one country trades for the goods ofanother country.(b) The rate at which one country’s goods trade for those of another country.(c) The rate at which currencies of different countries are exchanged.(d) The rate at which one country’s currency trades for gold provided byanother country.As a result of more Americans visiting South Africa, we can expect, ceteris paribus:(a) an appreciation of the rand relative to the dollar.(b) a depreciation of the rand relative to the dollar.(c) an appreciation of the dollar relative to the rand.(d) that it…
IF A2 4. Historically the gold standard was the anchor for nearly every traded currency. Explain how the gold standard worked as nations traded domestically and internationally at fixed exchange rates.
A9 In which of the following scenarios are currency speculators likely to attack a country's currency? When a currency is manipulated such that it makes imports more attractive for domestic residents. When the currency is fairly valued. When the currency is undervalued. When the value of the currency is pegged below the market equilibrium rate. When a currency is manipulated such that it makes a country's exports more attractive.
1. Individual Problems 11-1 Suppose that the euro is trading at $1.85 per euro in the foreign exchange market. Next, suppose that the exchange rate falls to $1.11 per euro, due to falling interest rates in the eurozone. The following graph shows the supply and demand curves for euros in the foreign exchange market. On the following graph, shift either the supply curve for euros or the demand curve for euros to reflect the influence of “carry trade” (in isolation from other factors that may affect the exchange rate) on the exchange rate for euros. (Hint: Carefully consider which price is measured on the vertical axis and which currency is being measured on the horizontal axis.)
Let's suppose the current exchange for Forint (Hungary currency) vs. Kuna (Croatia currency) is: 55.75 Forint/Kuna. Suppose the interest rate on Hungary's government securities with one-year maturity is 3%, and that of Croatia is 2%. According to the International Fisher Effect model, Forint will _____ against the other currency.
Q.1.11 What is a foreign exchange rate? (a) The rate at which the currency of one country trades for the goods ofanother country.(b) The rate at which one country’s goods trade for those of anothercountry.(c) The rate at which currencies of different countries are exchanged.(d) The rate at which one country’s currency trades for gold provided byanother country.Q.1.12 As a result of more Americans visiting South Africa, we can expect, ceteris paribus:(a) an appreciation of the rand relative to the dollar.(b) a depreciation of the rand relative to the dollar.(c) an appreciation of the dollar relative to the rand.(d) that it will cost South Africans more to visit the United States.Q.1.13 What is a tariff? (a) A form of subsidy.(b) A tax on imported goods.(c) A tax on foreign property.(d) A form of quota.
If a dollar can buy 98 Japanese yen and a British pound costs $1.50, how many yen would it take to buy £1? If a pound of copper costs £1 in Britain, ¥1,600 per pound in Tokyo, and $1.45 per pound in the United States, where is a pound of copper most expensive and where is it least expensive?
9) Which of the following can lead to an increase in the demand for Japanese yen compared to the U.S. dollar? a) an increase in the relative price of Japanese-made goods b) an increase in the interest rate in Japan relative to the U.S. rate c) a decrease in the amount of yen bought by the U.S. government d) a decrease in the demand for goods made in Japan 10) Which of the following statements is NOT true? a) If a country's exports exceed its imports, then there is a trade surplus. b) If the balance of trade is positive, then the balance of payments is also positive. c) If a country's balance of trade is positive, then its exports exceed its imports. d) A country's balance of trade includes trade in both goods and services.