Assume the US dollar and the British pound are on the gold standard. The US dollar sets the price of gold at $35 per oz and the pound price is set at 5 per oz. What will be the exchange rate between the dollar and the pound?

- $5 per pound

- $6 per pound

- $7 per pound

In a fixed exchange rate regime the dollar to pound exchange rate is set at $1.50 per pound. If the interest rate in UK is 1% the interest rate (using the interest rate parity) in US will be:

- 0.5%

- 1.0%

-1.5%

Currently the exchange rate between Special Drawing Rights (SDR) and the US dollar:

- does not vary over time

- varies over time

Under the gold standard if the demand for a currency goes up the amount of gold held by the central bank will:

- increase

- be unaffected

- decrease

In a gold standard arrangement, the price of gold in terms of the currency is maintained by:

- taxation of trade in gold

- controlling the output at gold mines

- the central bank standing ready to buy and sell gold at the fixed price