Which of the following statements is correct?
A)A devaluation of the British pound would result in more dollars to the pound.
B)A revaluation of the British pound would raise the prices of U.S. goods in Britain.
C)A devaluation of the British pound would lower the prices of British goods in the United States.
D)Revaluations and devaluations of a country's currency were not allowed under the Bretton Woods system.

Question

Quizplus · Accepted Answer

A devaluation of the British pound would make British goods cheaper in the United States, as they would now require fewer U.S. dollars to purchase. Option A is incorrect because a devaluation means the pound would be worth fewer dollars. Option B is incorrect because a revaluation means the pound would be worth more, which would increase the purchasing power of the British and potentially decrease demand for U.S. goods, causing their prices to fall. Option D is incorrect because revaluations and devaluations were allowed under the Bretton Woods system, but they had to be approved by the International Monetary Fund.

Which of the Following Statements Is Correct