Under the Bretton Woods Agreement

question 191

Multiple Choice

Under the Bretton Woods agreement,

• A)nations could not adjust their exchange rates relative to the dollar for any reason
• B)currency values were based on a market basket of European currencies plus the dollar
• C)the world monetary system operated exactly like the gold standard of pre-World War II years
• D)the dollar was selected as the key reserve currency
• E)gold played no role

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Definitions:

Long Run

A period in economics during which all inputs, including capital, are variable, allowing firms to adjust all aspects of production.

Economic Profits

Profits exceeding the opportunity costs of all inputs, indicating a firm is not only covering its costs but earning more than the next best alternative use of its resources.

Product Demand Curve

A graphical representation showing the relationship between the price of a product and the quantity of the product demanded by consumers.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to make adjustments and the economy to achieve a steady state of operations with no tendency for change.