Question 1

a) After the collapse of the Bretton Woods Agreement, the Smithsonian Agreement was introduced as a revision to the Bretton Woods system. Discuss the changes under the Smithsonian Agreement that were aimed at restoring confidence in the Bretton Woods system. Provide 8 points

b) Salaries paid to managers are not an agency cost. Do you agree with the statement above? Justify your answer. Provide example with illustration. Provide 6 points

c) Explain why the management structure, such as centralised control and decentralised control, can affect the magnitude of the agency cost. Provide example with illustration. Provide 6 points