International Business The Challenge of Global Competition 13th Edition Donald Ball – Test Bank

International Business The Challenge of Global Competition 13th Edition Donald Ball – Test Bank

Chapter 08
The International Monetary System and Financial Forces

True / False Questions

1. Sir Isaac Newton established the price of gold in 1717 and de facto put England on the gold standard.

True False

2. The complexity of the gold standard was a part of its appeal.

True False

3. The Bretton Woods meeting in 1944 established a fixed-rate exchange system among Allied governments that was imposed on the Axis governments.

True False

4. The Bretton Woods system led to minimal growth in international trade but helped to reduce inflation levels.

True False

5. As a result of Bretton Woods and the dollar’s use as a proxy for gold, the United States ran up a balance-of-payments deficit of around $56 billion, which led to the United States going off the gold exchange standard in 1971.

True False

6. De Gaulle pushed Nixon to close the gold window at the Treasury, and this one action moved the IMF toward a floating exchange rate system.

True False

7. One possible current currency arrangement is a fixed peg, whereby the exchange rate of a currency is allowed to move (within a narrow band) with another currency. One example is the pegging of the Canadian dollar to the U.S. dollar.

True False

8. Global foreign currency exchange transactions total in the area of $4 trillion daily.

True False

9. The Bank for International Settlements operates as the banker for central banks.

True False

10. The controlling mechanism for a gold-based exchange system and a floating-rate system are the same.

True False