1. Consider the gold standard. In cases below, answer how nominal money supply would change: Decrease, Increase, or No change.

-Demand for gold accessory fell:

-Foreign country raised its interest rate:

-Supply of gold increased:

2. True or False.

"The gold standard gives the power to a country with large potential supply of gold to affect world money supply."

3. Which is the internal balance?

Full employment & CA surplus

CA balance & Price stability

Price stability & Full employment

4. To achieve the internal balance, at what level of the real output do the government / central bank need to stabilize the real output?

5. Choose the correct words.

"Current account deficit is not necessarily undesirable. But the huge deficits under the gold standard (could /could not) cause a balance-of-payments-crisis like problem. So, the gold standard system (had / had not) the mechanisms that supposedly could restore the balance of payments (equilibrium / surplus)."