The Bretton Woods Agreement could only work if the U.S.had:

Question

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The Bretton Woods Agreement was based on a fixed exchange rate system where currencies had a fixed value in terms of the US dollar, which was in turn fixed to gold at a rate of $35/ounce. Therefore, to maintain the system, the US had to maintain low inflation and no balance-of-payments deficit. This was because a country with a balance-of-payments deficit would have to exchange its reserves of gold or dollars to pay for its imports, leading to a decrease in its money supply and eventually a devaluation of its currency. Moreover, if the US had high inflation, other countries would demand more dollars for their exports, leading to a drain on US gold reserves and a possible collapse of the system.

The Bretton Woods Agreement Could Only Work If the U