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Appendix to Chapter 41: The United States and the Global Economy
41A-1
Appendix to Chapter 41: The United States and the Global Economy
McConnell Brue Flynn 21e
DISCUSSION QUESTIONS
1. Compare and contrast the Bretton Woods system of exchange rates with that of the gold
standard. What caused the collapse of the gold standard? What caused the demise of the Bretton
Woods system? LO7
Answer: The gold standard collapsed during the Great Depression because countries
REVIEW QUESTIONS
1. Think back to the gold standard period. If the United States suffered a recession, to what
degree could it engage in expansionary monetary policy?
Answer: The money supply could be expanded only to the extent that some fraction of
PROBLEMS
1. Suppose Zeeland pegs its currency, the zee, at 1 zee = 36 grains of gold while Aeeland pegs its
currency, the aeellar, at 1 aellar = 10 grains of gold. LO7
a. What would the exchange rate be between the zee and the aellar?
b. How many aellars could you get for 7 zees?
c. In terms of gold, would you rather have 14.5 zees or 53 aellars?
