Figure 19-10
-Refer to Figure 19-10.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 this was evidence of ________ and the IMF would allow a ________ in the exchange rate.

Question

Figure 19-10 
-Refer to Figure 19-10.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 this was evidence of ________ and the IMF would allow a ________ in the exchange rate.

Quizplus · Accepted Answer

The Bretton Woods System of exchange rates was a system of fixed exchange rates that was established after World War II. Under this system, the value of each currency was pegged to the value of the US dollar, and the IMF was responsible for maintaining the stability of the system. If the par exchange rate was $2 per pound and equilibrium persisted at $3, then this would be evidence of fundamental disequilibrium, and the IMF would allow a revaluation of the pound.

Figure 19-10 -Refer to Figure 19-10.Under the Bretton Woods System of Exchange