Answer the following statements true (T) or false (F)
1. Under the gold standard, a nation experiencing chronic trade deficits had to increase its money supply while reducing its holdings of gold.
2. After World War II, most nations adopted some type of fixed or controlled exchange rate system.
3. Under a fixed or controlled exchange rate system, if the United States wanted to increase the value of the dollar, it could buy foreign currencies with dollars.
4. Since World War II, the importance of gold in international exchange has increased.
5. The Bretton Woods system included the idea of fixed exchange rates.
1. FALSE
2. TRUE
3. FALSE
4. FALSE
5. TRUE
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Risk can often be reduced by investing in a large number of projects
Indicate whether the statement is true or false
An important effect of fractional reserve banking is that bankers have
a. little control over total reserves. b. total control over the amount of lending in the economy. c. no control over the amount of reserves in the banking system. d. some discretion over the money supply.