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1. Under the gold standard, all national governments promised to follow the rules of the game. What did this mean? 2. Under the gold standard,
1. Under the gold standard, all national governments promised to follow the "rules of the game." What did this mean? 2. Under the gold standard, the price of an ounce of gold in U.S. dollars was $20.71, while the price of that same ounce in British pounds was 3.8201. What is the implied $1 exchange rate? What would be the exchange rate between the dollar and the pound if the U.S. dollar price had been $41.62 per ounce of gold? 3. What was the foundation of the Bretton Woods international monetary system, and why did it eventually fail? 4. What are the advantages and disadvantages of fixed exchange rates? 5. In December 1994, the government of Mexico officially changed the value of the Mexican peso from 3.16 pesos per dollar to 5.46 pesos per dollar. What was the percentage change in its value? Was this a depreciation, devaluation, appreciation, or revaluation? Explain. Note: to calculate the % change when foreign currency price of the home currency is used, the formula is: %A = (begin rate-end rate)/end rate x 100 6. Explain what is meant by the term impossible trinity and why it is in fact "impossible." 7. Why is the formation and use of the euro considered to be of such a great accomplishment? Was it really needed? Has it been successful? 8. How did the Argentine currency board function from 1991 to January 2002 and why did it collapse? 9. High capital mobility is forcing emerging market nations to choose between free-floating regimes and currency board or dollarization regimes. What are the main outcomes of each of these regimes from the perspective of emerging market nations? 10. What choices do you believe that China will make in terms of the Impossible Trinity as it continues to develop global trading and use of the Chinese yuan
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