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Question 1

Under a gold standard, all of the following are true, EXCEPT...?

The exchange rate between two currencies can deviate from the mint par ratio because of the cost of shipping gold

Gold is the ultimate international money

Each currency has its own mint par

Commodity price levels are constant

Question 2

All of the following statements about the FX market are true, EXCEPT...?

Empirically, market-determined forward exchange rates are biased estimates of future spot exchange rates

The dollar serves the function of an international currency, similar to the pound sterling prior to World War I

Most derivative transactions have the dollar as one leg, and involve other majors, not minors

By volume, the derivative market is smaller than the spot market

Question 3

All of the following statements about FX theories are correct, EXCEPT....?

The exchange rate is the relative price of unskilled labor in different countries

The survival constraint is the requirement that deficit countries find a way to settle with surplus countries

Purchasing Power Parity conceives of the exchange rate as the relative price of tradeable goods

Chartalists link the origins of money to sovereign power, and view money as a creation of the state

Question 4

What was the significant difference between the US and UK proposals for the international monetary framework at Bretton Woods?

The UK proposal would allow for flexible exchange rates, consistent with market principles

The US proposal would allow for flexible exchange rates, consistent with market principles

Keynes' bancor proposal addressed the need for elasticity, while White's IMF proposal addressed the need for discipline

Banking school (US) versus Currency School (UK)

Question 5

Which of the following BEST characterizes Mundell's views on international money?

Maintaining a constant value of gold is more important than maintaining stable prices

Inconvertible national currencies can never serve effectively the functions of international money

We should work towards a goal of fully flexible exchange rates, as this is consistent with free market principles

Reducing the volatility of exchange rates and moving toward a genuine international currency are the most important policy goals

Question 6

Which of the following MOST accurately characterizes some aspect of the international monetary system?

The quantity of Special Drawing Rights outstanding today is unchanged since the establishment of the IMF at Bretton Woods

Global reach by huge hedge funds has effectively privatized the central banking role

Foreign central banks rely on liquidity swaps with the Fed as the source of dollars to meet the liquidity needs of foreign banks rolling over dollar-denominated liabilities.

Central banks failed to coordinate their actions during the recent financial crisis

In accordance with the Coursera Honor Code, I (KK Fong) certify that the answers here are my own work.

You cannot submit your work until you agree to the Honor Code. Thanks!

Economics of Money and Banking, Part Two

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Economics of Money and Banking, Part Two
by Perry G Mehrling

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Economics of Money and Banking, Part Two

Economics of Money and Banking, Part Twoby Perry G Mehrling

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Economics of Money and Banking, Part Two
by Perry G Mehrling