Chap002 5 - 120,000 yen per ounce and to silver at 8,000...

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14. Suppose that country A and country B are both on a bimetallic standard. In country A the ratio is 15 to one (i.e. an ounce of gold is worth 15 times as much as an ounce of silver in that currency), while in country B the ratio is ten to one. If the free flow of capital is allowed between countries A and B is this a sustainable framework? A. Yes B. No C. There is not enough information to make an informed determination. 15. Suppose that both gold and silver are used as international means of payment and the exchange rates among currencies are determined by either their gold or silver contents. Suppose that the dollar was pegged to gold at $20 per ounce, the Japanese yen is pegged to gold at
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Unformatted text preview: 120,000 yen per ounce and to silver at 8,000 yen per ounce of silver, and the Australian dollar is pegged to silver at $5 per ounce of silver. What would the exchange rate between the U.S. dollar and Australian dollar be under this system? A. $1 U.S. = $1 Australian B. $1 U.S. = $2 Australian C. $1 U.S. = $3 Australian D. None of the above 16. The United States adopted the gold standard in A. 1776. B. 1879. C. 1864. D. 1973. 17. The gold standard still has ardent supporters who believe that it provides A. an effective hedge against price inflation. B. fixed exchange rates between all currencies. C. monetary policy autonomy. D. all of the above...
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This note was uploaded on 11/09/2011 for the course FIN IFMG201 taught by Professor Eun during the Spring '11 term at Michigan Flint.

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