1. In the trade based model, the supply of a country’s currency in foreign exchange markets is primarily a function of

a. Its trade surplus

b. Its trade deficit

c. Its domestic savings rate

d. Government taxes

e. Its money supply growth

 2. What does “redemption” refer to in discussions of commodity-money and the Gold Standard?

a. confirmation that specie payments will be suspended

b. proof of funds

c. the right to exchange money in bank accounts and paper money for commodity money coins

d. the right to require that customers pay in a specific currency

e. a court verdict confirming that a contract is ”good as gold”

3. What type of policies has the World Bank emphasized after the McNamara era?

a. poverty alleviation

b. income redistribution

c. policy-based lending

d. import substitution

e. recovery from wartime  destruction

4. A more common term for “forward” is __________________________.

a. Horizontal

b. Upstream

c. Downstream

d. Value chain

e. Conglomerate

5. What does it mean when a currency “floats?”

6. If a country’s current account and its Official Reserve Account were both positive, then its capital/financial account would be ___________________________.

7. In the vertical value chain and in the global production network, the firm’s upstream boundary is defined by where __________________________ production stops and  ________________ production starts.

8. In the vertical value chain and in the global production network, the firm’s downstream boundary is defined by where __________________________ production stops and  ________________ production starts.

9. How can a firm protect itself from a potential hold-up problem?

10. Why are GDP per capita for less developed countries higher when PPP rates are used (rather than exchange rates) to convert their currencies to dollars? and Why are GDP per capita for developed countries lower when PPP rates are used (rather than exchange rates) to convert their currencies to dollars?

11. Under the Gold Standard (1870 -1914), a country’s currency was sometimes reduced in value relative to gold. This was called a ____________________________________.

12. Under the Gold Standard (1870 – 1914), if a country runs a balance of payments deficit, the country’s gold reserves will  __________________. This led to ______________________ prices in the country, ______________ exports, and __________________ imports. In this process, what happens to the exchange rate? _______________________.