Suppose that after World War II, the United States and France agree to peg their currencies to each other under the Bretton Woods system at an exchange rate of $2 per franc. Suppose American demand for francs increases, and the equilibrium dollar price of a franc rises to $3 per franc. 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? O Borrow French francs from the IMF and use the francs to buy dollars. Exchange dollars for francs in order to buy gold from France. Decrease U.S. Income taxes,

Suppose that after World War II, the United States and France agree to peg their currencies to each other under the Bretton Woods system at an exchange rate of $2 per franc. Suppose American demand for francs increases, and the equilibrium dollar price of a franc rises to $3 per franc. 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? O Borrow French francs from the IMF and use the francs to buy dollars. Exchange dollars for francs in order to buy gold from France. Decrease U.S. Income taxes,

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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