Deck 11: Gold

Question 1

Which of these is the least desirable characteristic of gold:

A) It does not corrode
B) It can be alloyed with other metals
C) It is scarce
D) Bars of it are heavy

Answer 1

D

Question 2

Gold as an investment:

A) Produces little-to-no return
B) Yields high returns
C) Pays high dividends
D) Has a higher average return than stocks

Answer 2

A

Question 3

Which of the following is the least important factor that can make gold serve as a form of money:

A) It can be a medium of exchange
B) It can be a store of value
C) It is durable
D) It can be a unit of account

Answer 3

C

Question 4

A gold-based commodity money prevents:

A) The central bank from independently pursuing expansionary monetary policy
B) Recessions
C) Confidence from falling
D) Countries from erecting trade barriers with one another

Question 5

A gold standard is:

A) A political system
B) A system of floating exchange rate
C) A system of fixed exchange rates
D) A system of no international trade

Question 6

Which of the following is the factor that least prevents us from returning to a gold standard:

A) Speculative attacks against exchange rates
B) Lack of confidence in gold
C) An insufficient stock of gold
D) A desire to maintain autonomous monetary policy

Question 7

The most common solution to a speculative attack against a fixed exchange rate is to:

A) Borrow money from other countries
B) Reduce capital controls
C) Appoint new governors of the central bank
D) Abandon the fixed exchange rate

Question 8

In the face of expected depreciation of a fixed exchange rate, the central bank must:

A) Lower interest rates
B) Raise interest rates
C) Expand the monetary base
D) Raise minimum reserve requirements

Question 9

The price of gold is primarily driven by:

A) Confidence in the ruling government of a nation
B) How the stock market is performing
C) Supply and demand
D) Markets' expectation of a recession