4. Bretton Woods Suppose that after World War II, the United States and Great Britain agree to peg their currencies to each other under the Bretton Woods system a an exchange rate of $2.00 per pound. Suppose American demand for pounds increases, and the equilibrium dollar price of a pound rises to $3.00 p pound. Which of the following actions could the U.S. government use under Bretton Woods to help eliminate the balance-of-payments imbalance at the pegged exchange rate? Exchange dollars for pounds in order to buy gold from Great Britain Borrow British pounds from the IMF and use the pounds to buy dollars Decrease U.S. income taxes Which of the following is the reason the Bretton Woods system was officially dissolved in 1971? The U.S. suffered growing balance-of-payments deficits. Temporary economic changes in some of the member countries deviated equilibrium exchange rates from targeted rates. The International Monetary Fund (IMF) refused to continue supervising the exchange rate practices of member countries. True or False: With either dollarization or currency boards, interest rates must be equal to the reserve currency country's prevailing rates. True O False

4. Bretton Woods Suppose that after World War II, the United States and Great Britain agree to peg their currencies to each other under the Bretton Woods system a an exchange rate of $2.00 per pound. Suppose American demand for pounds increases, and the equilibrium dollar price of a pound rises to $3.00 p pound. Which of the following actions could the U.S. government use under Bretton Woods to help eliminate the balance-of-payments imbalance at the pegged exchange rate? Exchange dollars for pounds in order to buy gold from Great Britain Borrow British pounds from the IMF and use the pounds to buy dollars Decrease U.S. income taxes Which of the following is the reason the Bretton Woods system was officially dissolved in 1971? The U.S. suffered growing balance-of-payments deficits. Temporary economic changes in some of the member countries deviated equilibrium exchange rates from targeted rates. The International Monetary Fund (IMF) refused to continue supervising the exchange rate practices of member countries. True or False: With either dollarization or currency boards, interest rates must be equal to the reserve currency country's prevailing rates. True O False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

4. Bretton Woods
Suppose that after World War II, the United States and Great Britain agree to peg their currencies to each other under the Bretton Woods system a
an exchange rate of $2.00 per pound. Suppose American demand for pounds increases, and the equilibrium dollar price of a pound rises to $3.00 p
pound.
Which of the following actions could the U.S. government use under Bretton Woods to help eliminate the balance-of-payments imbalance at the
pegged exchange rate?
Exchange dollars for pounds in order to buy gold from Great Britain
Borrow British pounds from the IMF and use the pounds to buy dollars
Decrease U.S. income taxes
Which of the following is the reason the Bretton Woods system was officially dissolved in 1971?
The U.S. suffered growing balance-of-payments deficits.
Temporary economic changes in some of the member countries deviated equilibrium exchange rates from targeted rates.
The International Monetary Fund (IMF) refused to continue supervising the exchange rate practices of member countries.
True or False: With either dollarization or currency boards, interest rates must be equal to the reserve currency country's prevailing rates.
True
False

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