he advantage(s) of the gold standard in monetary system include _______. I. high inflation is less likely because of limited supply of gold II. cross-border flows of gold is easy III. the world economy can face deflationary pressure because of limited supply of gold IV. there is no mechanism to enforce the rules of the gold standard system, leading to the issue regarding de-monetization of gold. A. II, III and IV only B. I only C. III and IV only

he advantage(s) of the gold standard in monetary system include _______. I. high inflation is less likely because of limited supply of gold II. cross-border flows of gold is easy III. the world economy can face deflationary pressure because of limited supply of gold IV. there is no mechanism to enforce the rules of the gold standard system, leading to the issue regarding de-monetization of gold. A. II, III and IV only B. I only C. III and IV only

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter10: Measuring Exposure To Exchange Rate Fluctuations

Section: Chapter Questions

Problem 1CT

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The U.S. dollar, Norwegian krone, Swiss franc and Japanese yen often are labelled “haven currencies.” During times of international stress, each of these currencies typically can be expected to: (a) depreciate; (b) appreciate; (c) be devalued; (d) yield fewer units of foreign currencies when traded in open markets.
An important problem with the gold standard was that 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.
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