POLSCI 160 Midterm: Exam 2 CH8 and 9 Study Guide
Document Summary
Bretton woods monetary system: the monetary order negotiated among the. World war ii allies in 1944, which lasted until the 1970s and was based on a us dollar tied to gold; other currencies were fixed to the dollar but were permitted to adjust their exchange rates. Adjustable peg: a monetary system of fixed but adjustable rates; governments are expected to keep their currencies fixed for extensive periods, but are permitted to adjust the exchange rate from time to time as economic conditions change. Fixed exchange rates, such as the gold standard or a peg to the dollar, provide currency stability and predictability, which greatly facilitate international trade, investment, finance, migration, and travel. A fixed currency provides stability that facilitates international economic exchange, it also provides a monetary anchor that keeps prices stable. A government on a fixed exchange rate is committed to maintaining its currency"s value, even if economic conditions could be improved with a change.
