The Bretton Woods System Had an Achilles' Heel: the System

question 79

Multiple Choice

The Bretton Woods system had an Achilles' heel: The system could not work if its key currency,the U.S.dollar,was what?

• A) overvalued
• B) undervalued
• C) under speculative attack
• D) subject to a high U.S. inflation rate
• E) not based on the gold standard

---

Definitions:

P/E Ratio

Price-to-Earnings Ratio, a valuation metric comparing the current share price of a company to its per-share earnings.

ROE

Return on Equity, a financial ratio that measures the profitability of a corporation in relation to stockholders' equity.

EPS

Earnings Per Share, a financial metric that divides a company's profit by the number of its shares outstanding.

Market Capitalization Rate

The expected return on an investment in a market portfolio, based on the market price of risk.