Question

The anchor currency in the Bretton Woods System was the US dollar. What did this mean?

1) The dollar was convertible into any other currency at varying rates, but within a fixed range.
2) The dollar was fully convertible into gold at a fixed price, while other currencies in the system had a stable exchange rate with the dollar.
3) The dollar was fully convertible into gold at a fixed price, but other currencies in the system had variable exchange rates with the dollar.
4) The dollar was convertible into gold but at varying rates, depending on the state of the US economy.

Answer 1

The anchor currency in the Bretton Woods System was the US dollar, which was fully convertible into gold at a fixed price, while other currencies in the system had variable exchange rates with the dollar.

Step-by-step explanation:

The anchor currency in the Bretton Woods System was the US dollar. This meant that the dollar was fully convertible into gold at a fixed price, but other currencies in the system had variable exchange rates with the dollar (Option 3). The US government guaranteed that every dollar was backed by gold at a rate of one ounce of gold per 35 US dollars (USD). Other currencies had a fixed parity with gold and also with the US dollar.