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Exercice I - The international Monetary system A. Let us consider the two countries (Germany and the United-States) in 1913. Write the simplified balance sheet
Exercice I - The international Monetary system A. Let us consider the two countries (Germany and the United-States) in 1913. Write the simplified balance sheet for these two countries (i.e. position in the asset and liability side the following elements: Foreign reserves, currency in circulation, domestic credit to the economy). Germany has in 1913 a trade surplus with the US of 1.3 t of equivalent gold. Explain the consequences for the central bank balances sheets, for inflation and money supply in Germany and in the United-States. Is an exchange rate realignment necessary in the long run? B. The German surplus was going on in 1914. Because of the war, some American boats and their shipments were bombed. Explain the consequences
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