International Trade and Foreign Exchange Market Quiz

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The price of one currency in terms of another (correct)
The market where national currencies are traded
The rate at which countries suspend convertibility of their currencies into gold
The value of gold in the economy

<p>Many countries suspended convertibility of their currencies into gold (B)</p> Signup and view all the answers

<p>Long-term price stability and low inflation levels (B)</p> Signup and view all the answers

The price of one currency in relation to another.

Exchange rates were determined by the value of currencies in terms of gold.

Devalues the exchange rate of currencies.

Many countries stopped exchanging their currency for gold.

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Ensured long-term price stability and low inflation.

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Foreign exchange rate refers to the value of one country's currency in terms of another country's currency.

During the gold standard, exchange rates were determined by the gold content of currencies.
The gold standard ensured that currencies were backed by gold reserves, which maintained price stability and prevented inflation.

Printing new money not backed by gold increased the money supply, causing inflation and decreasing the value of currency.
This led to a decrease in the exchange rate, as the value of the currency decreased.

World War I led to the suspension of the gold standard, as countries printed more money to finance their war efforts.
The war marked the beginning of the end of the gold standard, as countries began to abandon it in favor of other monetary systems.