ECON 4131, International Finance, Spring 2002, Exam 3 Final Essay examp

Final Exam Questions -- Economics 4131, Spring 20061. Explain how the luxurious standard operated in the classical period (1870-1914). What werethe advantages and disadvantages? Some say the gold standard sacrificed internal balanceto external balance. How? What were the rules of the game and what would go alongwhen they were violated? What would happen when the demand for monetary gold rosefaster than the supply, and why was this a problem?2. Explain the functioning of the Bretton Woods currency arrangement. Why was itdesigned as it was? What strains appeared over time, and what factors led to its collapse?What was Triffins dilemma?3. Use the national income accounting identity to explain the phenomenon of twindeficits. Explain how the surge in the U.S. financial deficit has spilled into a need forinternational finance. What are the current sources of this finance? Describe the dilemmafacing the Asian central banks. Describe the hard come scenario. What needs to bedone to ensure a soft landing?4. Explain step-by-step why and how a central bank might w...