A persistent shortage or surplus of a currency under the Bretton Woods system was evidence of
A)failure to support the existing fixed exchange rate by central banks.
B)fundamental disequilibrium in the country's exchange rate.
C)speculation against the currency by speculators in world exchange markets.
D)all of the above

Question

Quizplus · Accepted Answer

According to the Bretton Woods system, a persistent shortage or surplus of a currency indicated fundamental disequilibrium in the exchange rate of the country. This was seen as a structural problem that needed to be addressed through policy changes and adjustments rather than by central bank intervention or speculation. Therefore, options A and C are incorrect as they do not reflect the underlying causes of the shortage or surplus.

A Persistent Shortage or Surplus of a Currency Under the Bretton