ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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To set up a system that would maintain a stable exchange rate system
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To create a flexible exchange rate system.
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To stop World War II.
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Eradicate the economic difficulties brought in by World War II.
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Detailed explanation-1: -The political basis for the Bretton Woods system was in the confluence of two key conditions: the shared experiences of two World Wars, with the sense that failure to deal with economic problems after the first war had led to the second; and the concentration of power in a small number of states.
Detailed explanation-2: -The Bretton Woods Institutions-the IMF and World Bank-have an important role to play in making globalization work better. They were created in 1944 to help restore and sustain the benefits of global integration, by promoting international economic cooperation.
Detailed explanation-3: -End of Bretton Woods system In August 1971, U.S. President Richard Nixon announced the “temporary” suspension of the dollar’s convertibility into gold. While the dollar had struggled throughout most of the 1960s within the parity established at Bretton Woods, this crisis marked the breakdown of the system.
Detailed explanation-4: -Summary. The Bretton Woods Agreement established a system through which a fixed currency exchange rate could be created using gold as the universal standard. The agreement involved representatives from 44 nations and brought about the creation of the International Monetary Fund (IMF) and the World Bank.