MGCR 382 Lecture Notes - Seigniorage, Money Supply, Maastricht Treaty

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The gold standard: each country set the rate at which its currency united could be converted to a weight of gold. Ww1 caused main trading nations to suspend operation of the gold standard. Selling short: a speculation technique in which an individual speculator sells an asset such as a currency to another party for delivering at a later dater. The speculator, however, does not yet own the asset, and expects the price of the asset to fall by the date when the asset must be purchased in the open market by the speculator for delivery. Modified gold standard was adopted in 1934 --- u. s. treasury traded gold only with foreign central banks, not private citizens. From 1934 to the end of ww2, exchange rates were theoretically determined by each currency"s value in terms of gold. After ww2, allied power created two new systems: the international monetary fund and the world.

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