Question : 51.Which of the following a great strength of the gold : 1299394

 

51.Which of the following is a great strength of the gold standard?  

A. It helped establish the dollar as a predominant vehicle currency.

B. It helped governments raise foreign exchange reserves thereby increasing economic stability.

C. It contained a powerful mechanism for achieving balance-of-trade equilibrium by all countries.

D. It helped reduce inflation to near-zero levels in all countries engaged in international trade.

E. It helped to establish a common currency across the globe to fund international trade.

52.Which of the following statements is true about the gold standard? 

A. Given a common gold standard, the value of any currency in units of any other currency was easy to determine.

B. Establishing a gold standard seemed impractical as the volume of international trade expanded in the wake of the Industrial Revolution.

C. A drawback of the gold standard was that it failed to provide a mechanism for achieving balance-of-trade equilibrium by all countries.

D. Under the gold standard, when a country has a trade deficit, there will be a net flow of gold from the other countries to that country.

E. The gold standard refers to the use of gold coins as a medium of exchange between countries involved in international trade.

53.In the 1930s, confidence in the _____ was shattered because countries were devaluing their currencies at will in order to boost exports. 

A. floating exchange rate system

B. gold standard system

C. fixed exchange system

D. Bretton Woods system

E. managed-float system

54.Certovia and Norkland are two neighboring countries that actively trade goods and services with each other. Under the gold standard, there will be a net flow of gold from Norkland to Certovia when:  

A. Certovia is in trade deficit with Norkland.

B. Norkland is in balance-of-trade equilibrium with Certovia.

C. Certovia is in trade surplus with Norkland.

D. Certovia imports more than it exports to Norkland.

E. Norkland’s balance of payment to Certovia is favorable.

55.Argonia Republic is in trade surplus with Kamboly. Under the gold standard, which of the following statements is true until a balance-of-trade equilibrium is achieved?  

A. There will be a net flow of gold from Argonia Republic to Kamboly

B. The money supply in Kamboly will reduce due to the flow of gold to Argonia Republic

C. The prices of the traded goods in Kamboly will increase

D. The demand for traded goods in Argonia Republic will increase

E. Kamboly will start to buy more goods from Argonia Republic

56.Which of the following was a reason that led to the collapse of the gold standard in 1939? 

A. Difficulty and complexity in using the gold standard to determine the exchange rate

B. Agreement by governments to convert paper currency into gold on demand at a fixed rate

C. A cycle of competitive currency devaluations by various countries

D. Expansion in the volume of international trade in the wake of the Industrial Revolution

E. The inability of the gold standard to act as a mechanism for achieving balance-of-trade equilibrium by all countries

57.According to the _____ in 1944, all countries were to fix the value of their currency in terms of gold but were not required to exchange their currencies for gold.  

A. Bretton Woods agreement

B. Washington Consensus

C. World Bank treaty

D. Group of Five treaty

E. United Nations agreement

58.The objective of establishing the World Bank was to: 

A. revive the gold standard.

B. promote general economic development.

C. control and manage the International Monetary Fund.

D. promote a floating exchange rate system.

E. approve large currency devaluations.

59.According to the Bretton Woods agreement of 1944, which was the only currency that remained convertible into gold? 

A. U.S. dollar

B. British pound

C. Japanese yen

D. German deutsche mark

E. Chinese yuan

60.Which of the following observations is true of the Bretton Woods agreement? 

A. The participating countries were required to exchange their currencies for gold.

B. Devaluation was accepted as a tool of competitive trade policy.

C. The agreement called for a system of floating exchange rates.

D. For weak currencies, devaluation of up to 10 percent was allowed without any formal approval by the International Monetary Fund.

E. A fixed exchange rate system was deemed impractical.

 

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