1. Consider a reserve currency standard system with three countries: A, B and C. One of them is the reserve currency issuing country. The table below shows the economic situations of three countries. In the economic situations, three countries reduced their nominal money supply. Answer which country is the reserve currency issuing country.

A B C

Economic Situation Boom Recession Y at Y_F

2. Consider the gold standard system. 3.a. Home central bank changed its monetary policy. Because of the new policy, Foreign nominal money supply fell. Answer if the new policy was contractionary or expansionary, and how the flow of gold across Home and Foreign countries caused by the new policy changed Home interest rate: Decrease, Increase, or No change.

Policy:

Change in RH:

2.b. In cases below, answer how Home nominal money supply would change: Decrease, Increase, or No change.

Popularity of gold accessories rose:

Foreign country increased its nominal money supply:

Home country lost gold: