International monetary system influence macroeconomic policy, International Economics

Assignment Help:

Q. How did the international monetary system influence macroeconomic policy-making and performance during the interwar period (1918 - 1939)?

Answer: Governments efficiently suspended the gold standard during World War I and financed part of their massive military expenditures by printing money.  Additional labor forces and productivity capacity had been abridged sharply through war losses.  Consequently price levels were higher everywhere at the conclusion of the war in 1918.  Of extraordinary note is the German hyperinflation that takes place when prices in Germany increased by a factor of 481.5 billion!

The United States go again to gold in 1919. In 1922 at a conference in Italy, Genoa a group of countries including France, Britain, Italy and Japan agreed on a program of a partial gold exchange standard in which smaller countries could hold as reserves the currencies of several large countries whose own international reserves would consist completely of gold.

In 1925 Britain returned to the gold typical by pegging the pound to gold at the prewar price.  Therefore the Bank of England was therefore forced to follow contractionary monetary policies that contributed to severe unemployment as well as to the decline of London as the leading financial center.

The world economy crumbles into increasingly autarkic (self-sufficient) national units in the early 1930s.


Related Discussions:- International monetary system influence macroeconomic policy

Economic effect of nationalization, Research about the effects of the Natio...

Research about the effects of the Nationalization in terms of: Economic effect of nationalization -International -What is happening to FDI? How it has affected other inter

Postwar worlds key currency, Q. Explain why the dollar of the United ...

Q. Explain why the dollar of the United States became the postwar world's key currency. Answer: 1. The untimely convertibility of the U.S dollar in 1945. 2.

Is a depreciation of the dollar/euro exchange rate, Is a depreciation of th...

Is a depreciation of the dollar/euro exchange rate correlated with a decrease in the dollar return on U.S. deposits? Answer:  No, suppose that the Interest Parity is maintained

What is the fisher effect?provide an example, What is the Fisher Effect?  P...

What is the Fisher Effect?  Provide an example. Answer: All moreover equal a rise in a country's expected inflation rate will ultimately cause an equal rise in the interest rat

What effect do non-tradable goods have on ppp, What effect do non-tradable ...

What effect do non-tradable goods have on PPP? Answer:  The consequence is quite substantial.  In 1997 the production of non-tradable goods accounted for about 55% of U.S GNP.

Survivor island, Identify and explain the three basic economic question tha...

Identify and explain the three basic economic question that the group of survivors will have to answer everyday

Opportunity cost, what are the different forms of opportunity cost theory

what are the different forms of opportunity cost theory

Analyse international expansion strategies, • What is the motive for expand...

• What is the motive for expanding into foreign markets, and more specifically why the chosen county. • Analysis of at least three alternative international expansion strategies

Does the existence of non-tradable goods allow for deviation, Does the exis...

Does the existence of non-tradable goods allow for deviations from Purchasing Power Parity? Answer:  Yes the continuation of non-tradable goods permits deviations from Purchas

Effects of government deficits on the current account, Q. Discuss the effec...

Q. Discuss the effects of government deficits on the current account. Answer: A difficult and hard issue that during the Reagan administration the creation of twin deficits whe

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd