Under the Bretton Woods System, Each Currency's Value Was to Be

question 113

Multiple Choice

Under the Bretton Woods system, each currency's value was to be fixed relative to other currencies. What was the mechanism for maintaining these rates?

• A) A currency board made up of representatives from all participating nations
• B) A currency board made up of representatives from the 12 largest (based on real GDP) participating nations
• C) Intervention by governments and central banks in the currency market
• D) Joint intervention by the Federal Reserve of the United States and the British Central Bank

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Definitions:

Creditor Nation

A country that has invested more in other countries than others have invested in it, leading to a net positive investment position.

Fiscal Policy

Government policies regarding taxation and spending that are aimed at influencing economic conditions, including managing inflation, unemployment, and stimulating economic growth.

Federal Budget Deficit

The financial situation in which the government's expenditures exceed its revenues within a given fiscal year.

Trade Deficit

A situation where a country's imports exceed its exports, leading to more money leaving the country than entering it.