The Architects of the Bretton Woods Agreement Built Limited Flexibility

question 89

Multiple Choice

The architects of the Bretton Woods agreement built limited flexibility into the fixed exchange rate system in order to

• A) avoid high unemployment.
• B) facilitate competitive currency devaluations.
• C) widen balance-of-payments gap between countries.
• D) increase money supply and thereby price inflation.
• E) avoid balance-of-trade equilibrium between countries.

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Definitions:

11%

11% typically refers to an interest or annual rate, indicating that 11 percent of the principal amount will be paid in interest over a year.

Nominal Rate

The promoted or declared rate of interest on a loan or investment, excluding the impacts of compounding and inflation.

Compounded Monthly

Interest calculation method involving the addition of interest to the principal sum of a loan or deposit, repeated every month.

Compounded Semi-Annually

Interest calculation method where interest is added to the principal sum twice a year, leading to interest earnings on interest.