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Chapter
10 Outline
Critical Discussion Questions
- Why did the gold standard collapse? Is there a case for
returning to some type of gold standard? What is it?
- What opportunities might current IMF lending policies
to Third World nations create for international businesses? What threats
might they create?
- Do you think the standard IMF policy prescriptions of
tight monetary policy and reduced government spending are always appropriate
for developing nations experiencing a currency crisis? How might the
IMF change its approach? What would the implications be for international
businesses?
- Debate the relative merits of fixed and floating exchange
rate regimes. From the perspective of an international business, what
are the most important criteria in a choice between the systems? Which
system is the more desirable for an international business?
- Imagine that Canada, the United States, and Mexico decide
to adopt a fixed exchange rate system similar to the ERM of the European
Monetary System. What would be the likely consequences of such a system
for (a) international
businesses and (b) the
flow of trade and investment among the three countries?
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