Why Was There Very Little Fluctuation in the Foreign Exchange

question 27

Multiple Choice

Why was there very little fluctuation in the foreign exchange rate in the period 1945-1973?

• A) This was a period when the world economy was very stable.
• B) There was very little growth in the world economy between 1945 and 1973.
• C) Countries linked their currency to the U.S. dollar, which was backed by gold reserves.
• D) Most currencies were pegged to the British pound, which could be converted to sterling silver.

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Definitions:

Purchased Equipment

Fixed assets acquired by a company for use in the production or supply of goods and services, not for resale.

Accounting Equation

The fundamental equation of accounting, represented as Assets = Liabilities + Equity, serving as the foundation for double-entry bookkeeping.

Utility Bill

A statement of charges incurred for services such as electricity, gas, water, or sewage.

Corporation

A legal entity owned by shareholders, with rights and liabilities distinct from those of its owners.