ABDM3234 International Business Planning

Tutorial 8
Chapter 10 International Money System
1. In the earliest days of international trade, ________ was the internationally accepted currency
for payment of goods and services.
A) British pound
B) U.S. dollar
C) silver
D) gold
2. The gold standard is a ________ because it secured nations' currencies to the value of gold.
A) floating exchange-rate system
B) fixed exchange-rate system
C) linked exchange rate system
D) free float system
3. The World Bank was created by the ________.
A) Jamaica Agreement
B) Bretton Woods Agreement
C) Smithsonian Agreement
D) Plaza Accord
4. Which of the following was created by the Bretton Woods Agreement to enforce the rules of
the international monetary system?
A) International Bank for Reconstruction and Development
B) International Capital Market
C) International Monetary Fund
D) World Bank
5. Which of the following is the intentional lowering of a currency's value by its government?
A) revaluation
B) devaluation
C) currency hedging
D) currency arbitrage
Discussion Questions
6. Explain the impact of added costs, trade barriers, and investor psychology on the ability
of purchasing power parity (PPP) to predict exchange rates accurately.
7. Explain how movement in a currency's exchange rate affects the activities of both
domestic and international companies

8. Explain the concept of devaluation, and explain the effect devaluation has on the price of
a country's imports.
9. Compare and contrast the two main techniques for forecasting exchange rates.