Tag: international economics

Quizzes (3) Questions (75)

Questions Related to international economics

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

The exchange rate system established under the Smithsonian agreement lasted for only 16 months.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Smithsonian Agreement was signed in December 1971 and effectively collapsed by early 1973 when the US dollar was devalued again and major currencies began to float, lasting roughly 14 to 15 months. The statement is generally considered false as it lasted slightly longer than 16 months or is at least a point of historical debate, but in most textbooks, the 'False' answer is preferred.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

The problem with the Bretton Woods exchange rate system was identified by Robert Triffin and was termed as _____________.

  1. Triffin dilemma

  2. Triffin paradox

  3. Triffin rigidity

  4. none of the above
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Triffin dilemma refers to the conflict of economic interests that arises for a country that issues the global reserve currency, identified by economist Robert Triffin.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

_____________ established an exchange rate system in 1971.

  1. Bretton woods conference

  2. Smithsonian agreement

  3. Triffin paradox

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Smithsonian Agreement was reached in December 1971 to attempt to save the fixed exchange rate system after the collapse of the Bretton Woods convertibility.

Multiple choice international experience of exchange rate systems open economy macroeconomics international economics economics

Which of the following is/are the reasons for the collapse of Bretton Woods system?
$1$. The refusal by the US Treasury to convert short-term liability into gold.
$2$. The US move to make dollar inconvertible.
$3$. The devaluation of US dollar in 1973.
Select the correct answer using the code given.

  1. $1$ only
  2. $1$ and $2$
  3. $2$ and $3$
  4. $1, 2$ and $3$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The primary cause of the collapse was the US Treasury's inability to maintain the gold-dollar convertibility due to excessive dollar supply and gold outflows. While the US did eventually make the dollar inconvertible (Nixon Shock), the refusal to convert short-term liabilities was the core systemic issue.