In class exercise

# In class exercise - Fin536 Exercises 1(Chapter 3 1(Gold...

This preview shows pages 1–2. Sign up to view the full content.

Fin536 Exercises 1 (Chapter 3 ) 1. (Gold Standard) Under the Gold Standard monetary system, each currency has its own gold content. Given the gold contents of two currencies, we are able to compute the exchange rate between them, for example, if one ounce of gold is equivalent to \$20 or £4.5, then the exchange rate between dollar and British pound is ________________________. This rate is typically fixed for a long period because the gold content in the currency doesn’t change often. In order to maintain the value of the currency, the government ___________(must/ must not) increase money supply at will. Therefore, the “rule of the game” under Gold Standard is that every government can ___________________(increase/decrease) money supply only when there is more gold available. 2. Define the following terms. (1) Devaluation (2) Revaluation (3) Depreciation (4) Appreciation 3. (Dilemma Triangle) Place the following goals of policy on an appropriate position on the following Dilemma Triangle (Impossible Trinity). (1)Monetary Independence

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

## This note was uploaded on 09/06/2011 for the course FIN 536 taught by Professor Staff during the Spring '11 term at S.F. State.

### Page1 / 2

In class exercise - Fin536 Exercises 1(Chapter 3 1(Gold...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online