Question: (10 points) Suppose that under the classical gold standard we had a par value for the Canadian dollar (C$) of C$8 = 1 ounce of

(10 points) Suppose that under the classical gold standard we had a par value for the Canadian dollar (C$) of C$8 = 1 ounce of gold and the par value for the Swiss franc (CHF) was CHF2 = 1 ounce of gold.What is the parity exchange rate in C$/CHF? __________________Suppose the cost of shipping gold was 0.2 CHF per ounce. What is the gold export point exchange rate for Switzerland, measured in C$/CHF? _________________ What is the gold import point exchange rate for Switzerland, measured in C$/CHF? __________________Without bothering to draw the figure, explain why the supply curve of Swiss francs reflects debits in the Swiss balance of payments (BOP) and why the demand curve reflects credits in the Swiss BOP.Suppose there is a large increase in the demand for CHF and the exchange rate rises to 4.50 C$/CHF. Which country would have a BOP surplus ______________ Which would have a deficit? __________In this case, EXPLAIN the direction in which gold would flow and how this would tend to correct the BOP imbalances.

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