Figure 19-10 -Refer to Figure 19-10.Under the Bretton Woods System of Exchange

question 29

Multiple Choice

Figure 19-10
-Refer to Figure 19-10.Under the Bretton Woods System of exchange rates,if the par exchange rate was $2 per pound in the figure above,and equilibrium persisted at $3,then this was evidence of ________ and the IMF would allow a ________ in the exchange rate.

• A)fundamental disequilibrium; revaluation
• B)fundamental disequilibrium; devaluation
• C)fundamental overvaluation; devaluation
• D)fundamental overvaluation; revaluation

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Definitions:

Future Price

The price of a good or service that is agreed upon today for delivery and payment at a future date.

Demand Curve

A graph depicting the relationship between the quantity of a good that consumers are willing to buy and its price.

Shift

A change in the position or direction of something, often used in economics to describe changes in demand or supply curves.

Caffeine

A stimulant found in coffee, tea, and other products, known for its ability to increase alertness and reduce feelings of tiredness.