The International Monetary System

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Question 1
Free
Multiple Choice

Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of gold cost $20.67 in U.S. dollars and £4.2474 in British pounds. Therefore, the exchange rate of pounds per dollar under this fixed exchange regime was:

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A

£4.8665/$.

B

£0.2055/$.

C

always changing because the price of gold was always changing.

D

unknown because there is not enough information to answer this question.

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Question 2
Free
Multiple Choice

World War I caused the suspension of the gold standard for fixed international exchange rates because the war:

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A

cost too much money.

B

interrupted the free movement of gold.

C

lasted too long.

D

used gold as the main ingredient in armament plating.

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Question 3
Free
Multiple Choice

The post WWII international monetary agreement that was developed in 1944 is known as the:

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A

United Nations.

B

League of Nations.

C

Yalta Agreement.

D

Bretton Woods Agreement.

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Question 4
Free
Multiple Choice

Another name for the International Bank for Reconstruction and Development is:

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A

the Recon Bank.

B

the European Monetary System.

C

the Marshall Plan.

D

the World Bank.

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Question 5
Free
Multiple Choice

The International Monetary Fund (IMF):

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A

in recent years has provided large loans to Russia, South Korea, and Brazil.

B

was created as a result of the Bretton Woods Agreement.

C

aids countries with balance of payment and exchange rate problems.

D

is all of the above.

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Question 6
Multiple Choice

One of the innovations introduced by Bretton Woods was the creation of the Special Drawing Right or SDR. The SDR is an international reserve asset created by the:

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A
U.S. Department of the Treasury.
B
International Bank of Reconstruction and Development (IBRD).
C
World Bank (WB).
D
International Monetary Fund (IMF).
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Question 7
Multiple Choice

Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton Woods?

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A
widely divergent national monetary and fiscal policies among member nations
B
differential rates of inflation across member nations
C
several unexpected economic shocks to member nations
D
all of the above
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Question 8
Multiple Choice

Which of the following statements is NOT true?

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A
The Gold Standard Era was characterized by growing openness in trade, but limited capital mobility.
B
The time period between World Wars I and II (the inter war years) witnessed significant reductions in trade barriers and a rapid acceleration in international trade.
C
The Bretton Woods Era (post WWII) realized the increasing benefits of open economies. Furthermore, trade was increasingly dominated by capital.
D
Since March 1973, exchange rates have become much more volatile and less predictable than previous periods.
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Question 9
Multiple Choice

A review of the evolution of the Global Monetary System shows that capital flows dominate trade in which of the following eras EXCEPT:

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A
Classical Gold Standard.
B
Fixed Exchange Rates, 1945-1973.
C
The Floating Era, 1973-1997.
D
The Emerging Era, 1997-Present.
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Question 10
Multiple Choice

Since 2009 the IMF's exchange rate regime classification system uses a "de facto classification" methodology. Under this system, a country that has given up their own sovereignty over monetary policy is considered to have:

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A
a residual agreement.
B
hard pegs.
C
soft pegs.
D
floating arrangements.
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Question 11
Multiple Choice

Since 2009 the IMF's exchange rate regime classification system uses a "de facto classification" methodology. Under this system, countries with "fixed exchange rates" are considered to have:

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A
a residual agreement.
B
soft pegs.
C
hard pegs.
D
floating arrangements.
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Question 12
Multiple Choice

A small economy country whose GDP is heavily dependent on trade with the United States could use a(n) ________ exchange rate regime to minimize the risk to their economy that could arise due to unfavorable changes in the exchange rate.

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A
pegged exchange rate with the United States
B
pegged exchange rate with the Euro
C
independent floating
D
managed float
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Question 13
Multiple Choice

Since 2009 the IMF's exchange rate regime classification system uses a "de facto classification" methodology. Under this system, currencies that are predominantly market-driven are considered to be:

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A
soft pegs.
B
hard pegs.
C
floating arrangements.
D
a residual agreement.
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Question 14
Multiple Choice

Among IMF member countries since 2010, the dominating exchange rate regime has been:

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A
hard peg.
B
soft peg.
C
floating arrangements.
D
residual agreement.
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Question 15
True/False

Under the terms of Bretton Woods, countries tried to maintain the value of their currencies to within 1% of a hybrid security made up of the U.S. dollar, British pound, and Japanese yen.

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True
False
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Question 16
True/False

Members of the International Monetary Fund may settle transactions among themselves by transferring Special Drawing Rights (SDRs).

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True
False
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Question 17
True/False

Today, the United States has been ejected from the International Monetary Fund for refusal to pay annual dues.

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True
False
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Question 18
True/False

The euro is an example of a rigidly fixed system, acting as a single currency for its member countries. However, the euro itself is an independently floating currency against all other currencies.

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True
False
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Question 19
True/False

Although the contemporary international monetary system is typically referred to as a "floating regime," it is clearly not the case for the majority of the world's nations.

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True
False
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Question 20
True/False

The IMF's methodology for classifying exchange rate regimes today is based on the official policy statement of the respective governments, de jure classification.

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True
False
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