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Q Search this course ? lia Homework: International Finance X Between 1879 and 1914, the world's major nations adhered to the gold standard. Under the

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Q Search this course ? lia Homework: International Finance X Between 1879 and 1914, the world's major nations adhered to the gold standard. Under the gold standard, a country maintained a fixed relationship between its stock of gold and its money supply. Suppose that Germany defined a German mark as 30 grains of gold, and the United States defined $1 as 60 grains of gold. A-Z Under the gold standard, a German mark would have been worth _ U.S. dollars. Suppose the fixed exchange rate is $0.50 per mark. Suppose that a recession in the United States leads to a reduction in imports from Germany. On the following graph, shift the relevant curve or curves to illustrate the described changes. Then use the black points (cross symbol) to indicate the imbalance. ? bange 1.00 O Supply for marks Demand for marks 0.75 Supply for marks PRICE OF A MARK (In Dollars) .50 The Imbalance 0.25 Demand for marks 12 16 QUANTITY OF MARKS (Millions) causing a A recession in the United States leads to a reduction in imports from Germany. As a result, the demand for German marks million imbalance in the U.S. balance of payments

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