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Global Business Today

Charles W. L. Hill Dr, G. Tomas M. Hult

Chapter 11

The International Monetary System - all with Video Answers

Educators

Chapter Questions

02:06

Problem 1

Why did the gold standard collapse? Is there a case for returning to some type of gold standard? What is it?

Vaibhav Jain
Vaibhav Jain
Numerade Educator

Problem 2

What opportunities might current IMF lending policies to developing nations create for international businesses? What threats might they create?

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01:23

Problem 3

Do you think the standard IMF policy prescriptions of tight monetary policy and reduced government spending are always appropriate for developing nations experiencing a currency crisis? How might the IMF change its approach? What would the implications be for international businesses?

Jennifer Stoner
Jennifer Stoner
Numerade Educator

Problem 4

Debate the relative merits of fixed and floating exchange rate regimes. From the perspective of an international business, what are the most important criteria in a choice between the systems? Which system is the more desirable for an international business?

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02:13

Problem 5

Imagine that Canada, the United States, and Mexico decide to adopt a fixed exchange rate system. What would be the likely consequences of such a system for (a) international businesses and (b) the flow of trade and investment among the three countries?

Majid Borumand
Majid Borumand
Numerade Educator
02:56

Problem 6

Reread the Country Focus on the U.S. dollar, oil prices, and recycling petrodollars, then answer the following questions:
a. What will happen to the value of the U.S. dollar if oil producers decide to invest most of their earnings from oil sales in domestic infrastructure projects?
b. What factors determine the relative attractiveness of dollar-, euro-, and yen- denominated assets to oil producers flush with petrodollars? What might lead them to direct more funds toward non-dollardenominated assets?
c. What will happen to the value of the U.S. dollar if OPEC members decide to invest more of their petrodollars toward non-dollar-denominated assets, such as euro-denominated stocks and bonds?
d. In addition to oil producers, China is also accumulating a large stock of dollars, currently estimated to total $$\$ 3.3$$ trillion. What would happen to the value of the dollar if China and oil-producing nations all shifted out of dollar-denominated assets at the same time? What would be the consequence for the U.S. economy?

Kaylee Mcclellan
Kaylee Mcclellan
Numerade Educator