Ch 7

1. Which city in the 19th century became the financial capital of the world and was the birthplace
of the first truly global monetary system?

London

2. The true power of gold as used in the gold standard of backing up paper currency was most
closely associated with which of the following?:

Its function as a standard of value and measure

3. What is the main reason why many governments opposed the gold standard?

It reduced their power over the money supply and spending

4. The break from the gold standard by the USA in 1971 was primarily due to which of the
following:

Financing of the Vietnam War

5. The Big Mac Index is...

Is used to calculate the relative under- or overvaluation of world currencies

6. The famous story the Wonderful Wizard of Oz is actually about:

The gold standard

7. What was the key factor that gave the British pound paper currency its great strength?

The guaranteed convertibility into gold

8. Which of the following was not a global institution introduced right after World War ll and
designed to bring about world economic and political stability?

The European Union