Question 1.
A. What are the alleged advantages of a fixed over a flexible exchange rate system? How do advocates of flexible exchange rates respond?
B. What overall conclusion can be reached on whether flexible or fixed exchange rates are preferred?
Question 2. What is meant by a crawling peg system? How can such a system overcome the disadvantage of an adjustable peg system?
Question 3. Explain:
A. How economic conditions today differ from those prevailing under the gold standard period.
B. Why the different economic conditions today would make the reestablishment of a smoothly working gold standard impossible.
Question 4.
A. With respect to a nation with a $100-million quota in the IMF, indicate how the nation was to pay in its quota to the IMF and the amount that the nation could borrow in any one year under the original rules.
B. How are the rules different today?
Question 5. Explain the role of the dollar under the Bretton Woods System.
Question 6. Explain briefly the operation of the present international monetary system.