International Monetary System

Which institution plays a key role in promoting cooperation and stability in the international monetary system?

• International Monetary Fund (IMF)

•   World Bank

• European Central Bank (ECB)

• Federal Reserve System (Fed)

Under a floating exchange rate system, what determines the exchange rate for each currency?

answer choices

• a currency's par value

• the gold standard

• its pegged value

• the forces of supply and demand

Under a managed float _______________________.

• currency values are determined only by private sector market force

• central banks sometimes manipulated exchange rates

• countries agree to buy or sell their paper currencies for gold

• the dollar’s value was allowed to fall on currency markets

Platinum was used as a medium of international exchange in ancient times because of its strength and value.

• True

• False

Explain the Bretton Woods System and its significance in the global economy.

• The Bretton Woods System was a trade agreement between European countries

• The Bretton Woods System was a monetary system that fixed exchange rates to the US dollar, promoting economic stability post-World War II, but collapsed in the early 1970s.

• The Bretton Woods System was a military alliance formed after World War II

• The Bretton Woods System was a social welfare program implemented in the 1950s

How do Floating Exchange Rates impact the global economy?

• Floating exchange rates only affect local businesses and have no impact on the global economy

• Floating exchange rates have no relevance to the global economy as they are just for show

• Floating exchange rates are currency values that fluctuate based on the foreign exchange market, influencing the global economy by affecting costs, competitiveness, and trade imbalances.

• Floating exchange rates are fixed values set by international organizations, limiting the global economy

What caused the downfall of the Bretton Woods System?

• Implementation of the Marshall Plan

• Signing of the Plaza Accord

• Abandonment of the gold standard by the United States

• Introduction of the Euro currency

Discuss the challenges faced by a multinational corporation in managing its global supply chain.

answer choices

• A multinational corporation faces challenges in managing its global supply chain due to issues such as logistics, inventory management, and supplier relationships.

• A multinational corporation faces challenges in managing its global supply chain due to employee training, office politics, and marketing strategies.

• Challenges in managing a global supply chain arise from legal regulations, environmental concerns, and customer demands.

• Managing a global supply chain is difficult due to lack of communication, cultural differences, and technological disruptions.

Advocates of flexible exchange rates claim that under flexible exchange rates, the central bank of_________________________.

• an overheated economy could cool down activity by increasing the money supply without worrying that undesired reserve inflow would undermine its stabilization effort.

• a cooled economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort.

• an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort.

• an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve outflow would undermine its stabilization effort.

• an overheated economy could cool down activity by decreasing employment and increasing output without worrying that this would undermine its stabilization

Which of the following currencies is currently linked to the price of gold?

answer choices

• British Pound

• US Dollar

• Japanese yen

• None of the above