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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

What did "Bretton woods system" involve?

Options:

Determination of Parity between two countries’ currency depending on gold reserves.

Pegging the value of all currencies to one currency (i.e. US dollar).

U.S. dollar was pegged to the price of gold.

Both 2 and 3

Correct Answer:

Both 2 and 3

Explanation:

The correct answer is option 4: Both 2 and 3

The Bretton Woods system involved:

  • Pegging the value of all currencies to one currency (i.e., US dollar): Under the Bretton Woods system, other currencies were pegged to the US dollar, which was the primary reserve currency.

  • U.S. dollar was pegged to the price of gold: The US dollar was convertible into gold at a fixed rate.

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