The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4

-The Bretton Woods system required countries to actively buy and sell dollars to maintain fixed exchange rates when:
A)a country experienced a severe bout of inflation.
B)the free market equilibrium exchange rate differed from the fixed rate.
C)a country experienced serious unemployment.
D)the threat of recession began to spread from one country to another.
E)worldwide trade began to deteriorate.

Question

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
 
-The Bretton Woods system required countries to actively buy and sell dollars to maintain fixed exchange rates when:
A)a country experienced a severe bout of inflation. 
B)the free market equilibrium exchange rate differed from the fixed rate. 
C)a country experienced serious unemployment. 
D)the threat of recession began to spread from one country to another. 
E)worldwide trade began to deteriorate.

Quizplus · Accepted Answer

The Bretton Woods system required countries to actively buy and sell dollars to maintain fixed exchange rates only when the free market equilibrium exchange rate differed from the fixed rate. This was done to prevent fluctuations in exchange rates and maintain stability in international trade. The other options listed do not directly relate to the operations of the Bretton Woods system.

The Figure Below Shows the Demand (D) and Supply (S)