Tutoial 1 - with answers.docVIP

Topic 1: Introduction International Monetary System In the tutorial we will work through the multiple choice questions. The extra questions at the end are extra practice for your own study. MULTIPLE CHOICE QUESTIONS: 1. ___________ were the earliest multinationals. (a) raw-material seekers market seekers cost minimizers oil companies the Federal Reserve System of the U.S. 2. World War I caused the suspension of the gold standard for fixed international exchange rates because the war (a) cost too much money. (b) interrupted the free movement of gold. (c) lasted too long. (d) used gold as the main ingredient in armament plating. 3. Under the terms of Bretton Woods countries tried to maintain the value of their currencies to within 1% of a hybrid security made up of the U.S. dollar, British pound, and Japanese yen. (a) True (b) False 4. Which of the following led to the eventual demise of the fixed currency exchange rate regime worked out at Bretton woods? (a) Widely divergent national monetary and fiscal policies among member nations. (b) Differential rates of inflation across member nations. (c) Several unexpected economic shocks to member nations. (d) All of the above 5. On May 1, 2004 ________countries joined the European Union enlarging it to a total of _________ members. (a) 5 15 (b) 2 17 (c) 10 25 (d) 20 30 6. The 10 members that joined the European Union in May 2004 automatically assumed the euro as their national currency upon joining. (a) True (b) False 7. The Euro currency is fixed against other currencies on the international currency exchange markets, but allows member country currencies to float against each other. (a) True (b) False 8. According to the authors, what is the single most important mandate of the European Central Bank? (a) Promote international trade for countries within the European Union. (b) Price, in Euros, all products for sale in the European Union. (c) Promote price stability within the European Union. (d) Establish an EMU trade s