Figure 30-7

-Refer to Figure 30-7.Under the Bretton Woods System of exchange rates,if the par exchange rate was $2 per pound in the figure above,and equilibrium persisted at $3,then a revaluation of the currency would have

Question

Figure 30-7
 
-Refer to Figure 30-7.Under the Bretton Woods System of exchange rates,if the par exchange rate was $2 per pound in the figure above,and equilibrium persisted at $3,then a revaluation of the currency would have

Quizplus · Accepted Answer

A revaluation would increase the value of the pound in relation to the dollar, making British exports more expensive for American consumers. This would therefore result in a decrease in British exports to the United States and potentially a decrease in the current account surplus, rather than an increase as suggested by options C and D. Option B is incorrect because an increase in the price of imports to Britain would occur if the pound was devalued, not revalued.

Figure 30-7 -Refer to Figure 30-7.Under the Bretton Woods System of Exchange