ECO 120 Study Guide - Final Guide: Fixed Exchange-Rate System, Maastricht Treaty, Vietnam War
Document Summary
Integration: bretton woods to the treaty of maastricht 1944-1991. Failure of fixed exchange rates: 2 problems: bretton woods system (1944-1971) Fixed exchange rate system: reserves = gold and money, adjustable parities. Failure of bretton woods and collapse: internal/extenal problems bretton woods. Internal- countries can"t escape cycle of budget deficit, inflation, loss of competitiveness, currency crisis, devaluation. External problems- imported inflation from us: triffin problem: supply other countries with $, economic system around. Printing excess $ so now us dollar not worth 35 oz gold = budget and trade deficit. Us inflation carries over to inflation in other countries. European snake: countries don"t want to tie currency to anything, but want stable exchange rate. Maastricht treaty of 1991: eec now ec decides to becomes eu, an economic union: 1. Single european market by 1992: free trade in goods, services, capital and labor: 2.
