1. Which of the following statements is true about the various exchange rate systems?

1. In a fixed exchange rate system, the value of a currency is set by demand and supply
2. The key feature of the gold standard is that it requires a lot of interventions by each countrys monetary authority to keep the system working well
3. Since the collapse of the gold standard, the world has operated with a fixed exchange rate system
4. Since the collapse of the gold standard, the world has operated with a fixed exchange rate system
5. In a dirty float, the central bank of a country will try to influence demand and supply of its currency by buying and selling the currency in the foreign exchange market

2.The world trade organization:

1. Determines only what tariffs, not quotas, should be set on goods by member countries
2. Is a bureaucracy in Geneva that determines, independently of its members, what rules should govern trade
3. Acts as a mediator in disputes among multinational corportions
4. Sets rules about FDI as well as trade among nantions
5. Can only enforce rules that its members have unanimously agreed to advance

3. The purchasing power parity (PPP) theory tells us that a country with a high inflation rate will probably experience:

1. An appreciation in its currency exchange rate
2. A decrease in interest rates
3. The collapse of the gold standard
4. A depreciation in its currency exchange rate
5. A decrease in its money supply