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1. Suppose the value of the US dollar is pegged to gold at a rate of $50 per ounce. Next, suppose that the value of the British pound is pegged to the US dollar at a rate of 1.5 dollars per pound, and the value of the Canadian dollar is pegged to the US dollar at a rate of 1.38 Canadian dollars per US dollar. Calculate the value of the Canadian Dollar and the British pound relative to gold.

2. Using the information in question 1, calculate the exchange rate between the Canadian dollars to the British pound.

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Insha Fatima
Insha FatimaLv10
28 Sep 2019

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Related questions

1. Suppose the CFO of an American corporation with surplus cash flow had $100 million to invest last July 15 and the corporation did not believe it would need to utilize these funds to retool or expand production capacity for 1 year. Suppose further that the interest rate on 1 year CD deposits in US banks was .5%, while the rate on 1 year CD deposits in England (denominated in British Pounds) was 2% at the time. Suppose further that the exchange rate at that time was $1.68 per British pound .

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Explain why the Fed created all these extraordinary direct lending facilities instead of simply relying on traditional open market purchases of Treasury securities.

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