Under the Bretton Woods system,if a country developed a permanent deficit in its balance of trade that could not be corrected by domestic policy,this would require the:
A) country to import more than it exports.
B) country to make its exports more expensive.
C) International Monetary Fund to agree to a currency devaluation.
D) government to expand monetary supply in the economy.
E) government to involve in activities that led to exchange rate appreciation.

Question

Quizplus · Accepted Answer

Under the Bretton Woods system, if a country developed a persistent trade deficit that could not be corrected through domestic policy, it would have to seek approval from the International Monetary Fund (IMF) for a currency devaluation. This would involve reducing the value of the country's currency relative to other currencies, which would make its exports relatively cheaper and its imports relatively more expensive. This would, in turn, help to correct the trade deficit by encouraging more exports and reducing imports.

Under the Bretton Woods System,if a Country Developed a Permanent