Which of the two features of the IMF Articles of Agreement helped promote flexibility in external adjustment?
A) IMF members helped countries maintain full employment.
B) IMF allowed countries to attain internal balance.
C) New countries would enter the agreement if they fixed their exchange rate.
D) IMF members contributed their currency to form a pool of resources that IMF could lend to countries in need and parities in the exchange rate against the dollar could be adjusted with agreement of IMF.
E) IMF members argued against the use of floating exchange rates.
Question 2
Suppose that the spot exchange rate for a foreign currency is equal to 120, while the interest rate in dollars is 2 and the interest rate in the foreign currency is 3. What is the approximate forward rate that is consistent with this situation?
A) 115.56
B) 124.44
C) 118.77
D) None of the above.
