The Bretton Woods System Was One in Which Central Banks

question 61

Multiple Choice

The Bretton Woods system was one in which central banks

• A) bought and sold their own currencies to keep their exchange rates fixed.
• B) agreed not to intervene in the foreign exchange market to maintain a fixed exchange rate regime that had existed prior to World War I.
• C) agreed to limit domestic money growth to the average of the five largest industrial nations.
• D) agreed to limit domestic money growth to the average of the seven largest industrial nations.

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Definitions:

Capital Structure

The composition of a company's funding, including debt, equity, and other financial instruments, which defines how a company finances its overall operations and growth.

Debt

Money that is owed or due to be paid, typically resulting from borrowing funds to be repaid with interest.

Financial Leverage

Financial leverage is the use of borrowed money (debt) to amplify the potential returns from an investment or project.

Leverage

The use of borrowed funds to increase the potential return of an investment.