12. Suppose that under the postwar dollar standard system foreign central banks had held dollar reserves in

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12. Suppose that under the postwar "dollar standard" system foreign central banks had held dollar reserves in the form of green dollar bills hidden in their vaults rather than U.S. Treasury bills. Would the international monetary adjustment mechanism have been symmetric or asymmetric? (Hint: Think about what happens to the U.S. and Japanese money supplies, for example, when the Bank of Japan sells yen for dollar bills that it then keeps.)

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International Economics Theory And Policy

ISBN: 9780321116399

6th Edition

Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz

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