Under the Bretton Woods Agreement

question 191

Multiple Choice

Under the Bretton Woods agreement,

• A)nations could not adjust their exchange rates relative to the dollar for any reason
• B)currency values were based on a market basket of European currencies plus the dollar
• C)the world monetary system operated exactly like the gold standard of pre-World War II years
• D)the dollar was selected as the key reserve currency
• E)gold played no role

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Definitions:

Equilibrium Price

The price at which the quantity of a good supplied equals the quantity demanded, resulting in market equilibrium.

Market-Determined Price

A price outcome established through the interaction of supply and demand, without external controls.

Binding Price Ceiling

A maximum legal price set below the equilibrium price, leading to shortages as demand exceeds supply.

Equilibrium Level

A situation where the balance between the market's supply and demand stabilizes prices.