4. Study Questions #4. Ch 14. Evaluate the following statement explaining the philosophy and operation of the Bretton Woods system of adjustable pegged exchange rates. True or False: The main feature of the adjustable pegged system was that currencies were tied to each other to provide stable exchange rates for commercial and financial transactions. When the balance of payments moved away from its long-run equilibrium position, a nation could re-peg its exchange rate via devaluation or revaluation policies. True False

True

Explanation:

The main goal or philosophy of the Bretton Woods system was to provide for global monetary stability, that would result in financial and commercial stability, because a steady value of the currencies around the world meant less risk and less uncertainty for investors, firms, goverments, and consumers.

However, the system provided some flexibility, because it took into account the fact that sometimes countries face devaluations or reevaluations of their currencies due to factors outside of their controls, such as currency especulation events, or unexpected disasters.

To determine the level of flexibility, and aid countries in this process, the International Monetary Fund was created. The IMF, during and after the years that the system was valid, helped many countries battle currencies crisis by providing economic and technical advice, and also by providing cheap monetary loans in exchange for policy concessions.

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi