Author Question: Which of the following was the reserve currency under the gold exchange standard? a. U.S. dollar ... (Read 39 times)

armygirl · **on:** Jun 30, 2018

Which of the following was the reserve currency under the gold exchange standard?
a. U.S. dollar
b. Euro
c. Great Britain pound
d. Australian dollar
e. Deutsche mark

Question 2

Suppose that in the absence of trade, the U.S. price for bicycles was higher than the world price for bicycles. Would allowing international trade, mean that the U.S. would import or export bicycles? Who in the U.S. would benefit and who would lose with a free trade policy, and would the gains be greater than the losses?

Jsherida · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

a

Answer to Question 2

The U.S. would import bicycles, as consumers demanded more bicycles at the lower world price. The U.S. price would fall to meet the world price, and the U.S. consumers would gain while U.S. producers would lose. The gains to consumers would however, outweigh the losses to producers.