INTERNATIONAL FINANCE Assignment Problems (4) Name: Student#: I. Choose the correct answer for the following questions (only correct answer) (3.5 credits for each question, total credits 3.5 x 20 = 70) 1. The exchange rate system refers to __________. A. a country’s internal economic policies such as employment, inflation and interest rate levels B. a country’s monetary policiesC. a country’s fiscal policesD. a country’s choice as to which exchange rate regime such as fixed or floating or between to follow 2. The international monetary system is broadly defined as ___________. A. the set of conventions, rules, procedures and institutions that govern the conduct of financial relations between nations B. the set of rules to manage every country’s central banks C. the set of rules to solve trade disputes between countries D. the set of rules to develop world economy 3. Under the gold standard, the exchange rate was fixed because __________. A. each currency unit could be converted to a weight of gold B. the gold could be exported and imported with no restrictions C. gold coins could be freely minted D. all of the above 4. When the gold standard prevailed, the United States fixed the price of gold at $20.646 per ounce and the Britain fixed the price at 4.252 per ounce. Now suppose the fees for transporting one ounce of gold were approximately $0.03 per sterling of gold. Then the exchange rate of dollar versus sterling would fluctuate between _________. A. $4.8856/? and $4.8256/?B. $4.9042/? and $4.8070/?C. $4.9770/? and $4.7463/?D. We don ’t know, because it depends on the supply and demand forces in the foreign exchange market 5. Under the gold standard, the par value of the exchange...
