The Triffin Paradox

question 29

Multiple Choice

The Triffin paradox

• A)was first proposed by Professor Robert Triffin.
• B)warned that the gold-exchange system of the Bretton Woods agreement was programmed to collapse in the long run.
• C)was indeed responsible for the eventual collapse of the dollar-based gold-exchange system in the early 1970s.
• D)all of the above are correct

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Definitions:

Long-run Equilibrium

A state in which all factors of production and costs are variable, allowing firms in a perfectly competitive market to make zero economic profit, balancing supply and demand.

Maximum Profits

The highest possible financial gain that a business can achieve in a given period, optimizing revenue while minimizing costs.

Long-run Equilibrium

A state in which supply equals demand and all factors of production and markets are in balance, typically considered in the context of perfect competition.