Question

What is the exchange regime implied by the Bretton Woods? What are the other significant elements of Bretton Woods?

Answer 1

The Bretton wood agreement came into effect in 1944, it took place in Bretton wood, New Hemisphere… and was accepted by all the nations who actively took part in world war II. Under the agreement countries would follow a fixed exchange rate between their currency and dollar.

    This Bretton wood system marked the end of gold standard system followed earlier, according to this system if a countries currency value becomes too weak in response to dollar, the world bank would buy up its currency in foreign exchange market. That would decrease the supply, which would raise its price. If its currency becomes too high, the bank would print more. That would increase its price and lower its price.