Under the bretton woods international monetary system prices...

Under the Bretton Woods international monetary system: Prices of all currencies were pegged at a fixed rate to a basket of major currencies The U.S. dollar was convertible into gold at a rate of $20.67 per ounce Prices of major currencies were pegged at a fixed rate to the U.S. dollar Prices of major currencies were fixed in terms of gold

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00:01 So here we have this idea that people need u .s.

00:05 Dollars and gold under the bretton wood system.

00:09 Right.

00:10 And i don't want to get into the economic history of the bretton wood system.

00:13 It's fascinating.

00:13 You should definitely read all about it.

00:16 But we're thinking simply about central banking policy in a world of fixed exchange rates pegged to gold.

00:27 So we have to make two things.

00:28 We need to stimulate imports or exports if we look at the answers, right? for abcd.

00:34 The first one is either imports or exports.

00:37 And the second one is increasing and decreasing.

00:40 So the first one is one, we need to be stimulating exports.

00:49 And the idea is when we sell goods, we get paid.

00:56 We get gold back, right? and gold and u .s.

01:00 Dollars here are the same thing because remember that gold and u .s.

01:04 Dollars are fixed at a certain exchange rate.

01:05 So you can always turn your gold into u .s.

01:07 Dollars or your u .s.

01:08 Dollars into gold at this prevailing rate of $35 an ounce.

01:12 So if we stimulate exports, we are selling our goods and we are getting payments back from other countries, right? so we would particularly want to stimulate exports to the u .s.

01:23 Right? they will pay us in u .s.

01:27 Dollars and u .s.

01:28 Dollars are gold...

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