Under the Bretton Woods system

a. each country established a par value for its currency in relation to the dollar.

b. the U. S. dollar was pegged to gold at $35 per ounce.

c. each country was responsible for maintaining its exchange rate within 1 percent of the adopted par value by buying or selling foreign exchanges as necessary.

d. all of the options

Question

Business

Lorelai Butler

6 March, 12:38

Under the Bretton Woods system

a. each country established a par value for its currency in relation to the dollar.

b. the U. S. dollar was pegged to gold at $35 per ounce.

c. each country was responsible for maintaining its exchange rate within 1 percent of the adopted par value by buying or selling foreign exchanges as necessary.

d. all of the options

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Answers (2)

Know the Answer?

Quinton Vega · Answer 1

The answer is D. All of the options

Explanation:

The Bretton Woods system of of monetary management which was negotiated in 1944 with the aim of creating an international monetary system.

Under this system, representatives of countries agreed to establish a par value of their respective currencies in relation to the dollar. Dollar was pegged at $35 per ounce, and each country was responsible for maintaining its exchange rate within 1 percent of the adopted par value by buying or selling foreign exchanges as necessary.

However, in the early 1970s, President Richard Nixon made the announcement that the United States would no longer be accepting gold in exchange for the dollar, and the put an end to the Bretton Woods system.

Ramiro Baxter · Answer 2

D) all of the options

Explanation:

The Bretton Woods system lasted between 1944 and 1971, until the US exited the gold standard. the gold standard pegged the value of the US dollar and other currencies to gold reserves.

The problem with the gold standard was that it didn't consider rising inflation and severely limited any actions that the FED could take to try to control it. It also limited economic growth, since the gold reserves couldn't keep up with the growth of the economy. This didn't only happen to the US, all the countries that adopted the gold standard stopped using it for the same reasons.

The original idea of the Bretton Woods agreement was that each country would peg its exchange rate to a certain value of gold, but as the price of gold increased, the rest of the countries pegged the value of their currency to the US dollar. That is why the US dollar is still today the most widely used currency in the world and almost 60% of all the physical currency is held outside the US.