Under the Bretton Woods System, a Country with a Balance

question 142

Multiple Choice

Under the Bretton Woods system, a country with a balance of payments deficit

• A)could get loans from the U.S.government.
• B)could devalue if deflationary policies failed to eliminate the deficit.
• C)was not allowed to devalue under any circumstance.
• D)was required to devalue its currency immediately.

---

Definitions:

Survivorship Bias

The analytical error of focusing only on entities that have "survived" a selection process, ignoring those that have failed.

Infrequently-Traded Assets

Assets that do not trade on a regular basis on the secondary market, making their valuation and liquidity different from frequently traded assets.

Liquidity Premiums

Additional returns investors demand for holding securities that are not easily convertible to cash without a loss in value.

Mispricing

The occurrence when the market price of an asset does not accurately reflect its intrinsic value, possibly due to information asymmetry, market inefficiency, or other factors.