Chapter 3

chapter 3
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Unformatted text preview: Fundamentals of Multinational Finance, 4e (Moffett) Chapter 3 The International Monetary System Multiple Choice and True/False Questions 3.1 History of the International Monetary System 1) World War I caused the suspension of the gold standard for fixed international exchange rates because the war 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. Answer: B 2) The post WWII international monetary agreement that was developed in 1944 is known as the ________. A) United Nations B) League of Nations C) Yalta Agreement D) Bretton Woods Agreement Answer: D 3) Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton Woods? 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 Answer: D 4) An international gold standard for currency exchanges has the implicit effect of A) making currencies float relative to the price of gold. B) limiting the growth of a country's money supply subject to the ability of the official authorities to obtain more gold. C) melting the polar ice caps. D) encouraging the United Kingdom to abandon the Pound Sterling in favor of the Euro. Answer: B 5) Which of the following is NOT a characteristic of the Bretton Woods Agreement? A) Member nations would enjoy a fixed exchange rate with an "adjustable peg" B) The International Monetary Fund would be formed C) The World Bank would be formed D) All of the above are characteristics of the Bretton Woods Agreement Answer: D 1 Copyright © 2012 Pearson Education, Inc. 3....
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