Question : 19.7   The External Balance Problem of the United States Under : 1303674

19.7   The External Balance Problem of the United States Under Bretton Woods

1) The confidence problem of the Bretton Woods systems articulated by Robert Triffin refers to

A) the unwillingness of central banks to accumulate currency for fear of not being able to convert it to gold in case a run on the banks occurs.

B) consumer fear of stock market instability.

C) producer fear of rising wages.

D) the lack of convertibility of gold into silver.

E) low consumer spending because of balance of payment crises.

2) A two-tier gold market like the one created during the Bretton Woods System refers to

A) a private tier for private gold traders where the price would not be allowed to fluctuate, and an official tier for central banks where the official gold price would be allowed to fluctuate.

B) a private tier for private gold traders where the price would not be allowed to fluctuate, and an official tier for central banks where the official gold price would rise on a yearly basis by pre-determined increments.

C) a private tier for private gold traders where the price would be allowed to fluctuate, and an official tier for central banks where the official gold price would be set at $35 an ounce.

D) a private tier for private gold traders where the price would be set at $35 an ounce, and an official tier for central banks where the official gold price would be allowed to fluctuate.

E) a private tier for private gold traders where the price of gold would rise on a yearly basis by pre-determined increments, and an official tier for central banks where the official gold price would be set at $35 an ounce.

3) In order to bring about a real depreciation of the dollar, the U.S. can hope for

A) a rise in the U.S. price level.

B) a fall in foreign price levels.

C) a rise in the dollar’s nominal value in terms of foreign currencies.

D) a rise in foreign price levels or a fall in the dollar’s nominal value in terms of foreign currencies.

E) increased output and full employment.

4) The collapse of the Bretton Woods system marked

A) the end of floating exchange rates and a move to fixed exchange rates.

B) marked the end of fixed exchange rates and a move to floating exchange rates.

C) the beginning of the gold standard.

D) a plunge in the price of gold.

E) the elimination of paper currencies.

5) Which of the following statements is MOST accurate?

A) A revaluation restores internal and external balance immediately, without causing domestic inflation.

B) A devaluation restores internal and external balance immediately, without causing domestic inflation.

C) A revaluation restores internal and external balance immediately, but also causes domestic inflation.

D) A devaluation restores internal and external balance immediately, but also causes domestic inflation.

E) A devaluation restores external balance in the long run, without causing immediate domestic inflation.

6) Which of the following is the MOST accurate?

A) U.S. macroeconomic policies in the late 1960s helped cause the breakdown of the Bretton Woods system by early 1973.

B) U.S. macroeconomic policies in the late 1970s helped cause the breakdown of the Bretton Woods system by early 1983.

C) U.S. macroeconomic policies in the late 1980s helped cause the breakdown of the Bretton Woods system by early 1993.

D) U.S. macroeconomic policies in the late 1950s helped cause the breakdown of the Bretton Woods system by early 1963.

E) U.S. macroeconomic policies in the late 1960s delayed the breakdown of the Bretton Woods system to early 1973.

7) Refer to the graph below, which shows the effect of ________ on the home economy.

A) foreign inflation

B) domestic inflation

C) foreign deflation

D) domestic recession

E) foreign recession

8) Refer to the graph below. The movement from point 1 to point 2 is stimulated by a disequilibrium in which there is domestic ________ and ________.

A) overemployment; trade surplus

B) unemployment; trade surplus

C) overemployment; trade deficit

D) unemployment; trade deficit

E) inflation; unemployment