An important problem with the gold standard was that one country could easily manipulate the system to its advantage and the disadvantage of other countries. a country did not have control of its domestic monetary policy. exchange rates tended to fluctuate a great deal, making it difficult for businesses to make long-run plans. it was too complicated and restricted business activity.

An important problem with the gold standard was that one country could easily manipulate the system to its advantage and the disadvantage of other countries. a country did not have control of its domestic monetary policy. exchange rates tended to fluctuate a great deal, making it difficult for businesses to make long-run plans. it was too complicated and restricted business activity.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter22: International Finance

Section: Chapter Questions

Problem 9QP

See similar textbooks

Similar questions

Under a gold standard, countries should Group of answer choices keep the supply of their domestic money constant. keep the supply of their domestic money fixed in proportion to their gold holdings. keep the supply of foreign exchange less than their domestic money supply. restrict the demand for foreign goods. outlaw speculation.
A problem with the operation of the gold standard in the world economy was that a. it involved too much government intervention in the economy. b. the world economy was subject to too much inflation. c. a country didn't have control of its domestic monetary policy. d. it caused the Great Depression.
Question An important problem with the gold standard was that Answer a. one country could easily manipulate the system to its advantage and the disadvantage of other countries. b. a country did not have control of its domestic monetary policy. c. exchange rates tended to fluctuate a great deal, making it difficult for businesses to make long-run plans. d. it was too complicated and restricted business activity.
If a company believed that a nation was preparing to devalue its currency, the company should reduce monetary assets and borrow extensively in that particular currency.
If the United States were running large trade deficits with Germany under an international gold standard system, we would expect which of the following to occur? The money supply in Germany would increase all of the other choices U.S. gold reserves would decrease Germany's gold reserves would increase. The money supply in the U.S. would decrease. none of the other choices
Adopting the Gold Standard for a country’s economy implies that a. Money supply can be easily increased or decreased b. Interest rates become flexible c. Utilizing monetary policy tools becomes constrained d. Fiscal policy becomes flexible
When a group of countries form a Common Currency (such as the Euro), which of the following is NOT considered to be a benefit of this arrangement? a. Lower interest rates for some countries. b. More stable inflation c. increased trade d. ability to use monetary policy to offset shocks
Years ago when banks generated bank notes on their deposits that citizens used as currency, they were often backed by hard assets, including gold that depositors placed with the bank. How is that any different from when the US was on the "gold standard?"
In the overshooting model, an increase in the money supply leads to higher inflation and currency depreciation. Can you think of a situation where higher inflation could lead to currency appreciation?
Suppose that Canada and Mexico allow their currencies to float. Other things equal, if the Canadian central bank raises Canadian interest rates relative to Mexican rates: Group of answer choices gold will flow into Canada. Mexico will be forced to sell official dollar reserves to maintain price stability. Mexico will be forced to accept policies leading to lower unemployment and higher prices. the Canadian dollar will appreciate relative to the Mexican peso.
Question Since all currencies had values fixed in units of gold under the gold standard Answer a. exchange rates were essentially floating. b. exchange rates were set to a crawling peg. c. exchange rates were essentially fixed. d. none of these
Can we believe that China is guilty of unfair trading practices including currency manipulation? Why?