Question

19. Gold, silver, and cigarettes in a prisoner of war are all examples of commodity money.

True

False

20. A devaluation is a reduction in the official value of a currency.

True

False

21. Specialization means that a country devotes its energy and resources to only a small proportion of the world’s productive activities.

True

False

22. Under the Bretton Woods system of fixed exchange rates, the price of the U.S. dollar was fixed in terms of gold and the prices of all other currencies were fixed in terms of dollars.

True

False

23. The United States was among the first of the modern industrial nations to establish a central banking system.

True

False

24. At higher interest rates, banks will want to hold more reserves.

True

False

Answer 1

Answer 19: It is a true statement, as commodity money is the money whose value derives from commodities like gold, silver, cigarettes, silk, etc.

Answer 20 It is a true statement, Devaluation is an official lowering of the value of a country's currency within a fixed exchange rate system. devaluing a currency reduces the cost of a country's exports and can shrink the trade deficit.

Answer 21: It is a true statement, as specialization means focusing on the production of a limited scope of goods to gain a greater degree of efficiency. it gives higher productivity, lower unit cost encourages investment in specific capital.

Answer 22: It is a true statement, as the Bretton woods agreement was negotiated in 1944 to establish a new international monetary system, the Bretton woods system. under this system, gold was the basis for the US dollar and other currencies were pegged to the US dollar's value.

Answer23: it is a true statement saying that US was the 1st industrial nation that establishes a central bank. A central bank is a financial institution that is responsible to oversee the monetary policy of the nation.

Answer 24 : It is a true statement.as by this central bank wants to decrease money supply in the economy. therfore it isincresing interest rate for the commercial banks so that banks can give less loans and hold more cash reserves.