Under the Bretton Woods agreement, if a country other than the United States ran a trade deficit, downward pressure was exerted on the currency's exchange rate. In order to maintain the agreed-upon exchange rate, what must this foreign central bank do?
A) It must purchase the excess supply of dollars with its own currency.
B) It must purchase the excess supply of its own currency with dollars.
C) It must supply its own currency and demand dollars to create a surplus in the official reserve account that just equals its deficit on current and capital accounts.
D) Both b and c
Correct Answer:
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Q2: When financial markets are more efficient
A)resources are
Q3: The Asian financial crisis of 1997-98 is
Q4: The international money market trades
A)short-term claims.
B)capital market
Q5: Which of the following affects the trading
Q6: Under the Bretton Woods Accord,
A)gold served as
Q8: Which of the following statements concerning the
Q9: Devaluation occurs when the monetary authorities
A)reduce the
Q10: Under the Bretton Woods Accord, official government
Q11: Revaluation occurs when monetary authorities
A)increase the value
Q12: Revaluation can
A)affect a country's economy.
B)reduce net exports.
C)have
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