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Unformatted text preview: A. only the silver currency will circulate. B. only the gold currency will circulate. C. no change will take place since citizens could exchange their gold currency for silver currency at any time. D. none of the above Topic: Bimetallism: Before 1875 Topic: Evolution of the International Monetary System 11. Suppose that your country officially defines gold as ten times more valuable than silver (i.e. the central bank stands ready to redeem the currency in gold and silver and the official price of gold is ten times the official price of silver). If the market price of gold is only eight times as much as silver. A. The central bank could go broke if enough arbitrageurs attempt to take advantage of the pricing disparity. B. The central bank will make money since they are overpricing gold. Topic: Bimetallism: Before 1875 Topic: Evolution of the International Monetary System...
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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.
- Spring '11
- Exchange Rate