The Bretton Woods System Was Expected to Be More Stable

question 28

Multiple Choice

The Bretton Woods system was expected to be more stable than the gold standard because

• A)the world supply of gold had increased greatly by the time the Bretton Woods system was established.
• B)large trade deficits and surpluses would be unlikely to occur under the Bretton Woods system.
• C)fewer countries were involved in the Bretton Woods system than had been involved in the gold standard.
• D)the IMF was set up to be a lender of last resort.

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Definitions:

Economic Profit

The profit a company makes after deducting both its explicit (direct) and implicit (opportunity) costs; it's a more comprehensive measure than accounting profit.

Allocative Efficiency

The optimal distribution of resources in a market where goods and services are dispensed according to consumer preferences.

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, allowing for significant competition but with some control over prices.