4. Bretton Woods Suppose that after World War II, the United States and Great Britain agree to peg their currencies to each other under the Bretton Woods system at an exchange rate of $2.00 per pound. Suppose American demand for pounds decreases, and the equilibrium dollar price of a pound falls to $1.00 per pound. Which of the following actions could the U.S. government use under Bretton Woods to help eliminate the balance-ofpayments imbalance at the pegged exchange rate? 0 Increase U.S. income taxes 0 Exchange dollars for pounds in order to buy gold from Great Britain 0 Use ofcial reserves of pounds to buy dollars in the foreign exchange market Which of the following is the reason the Bretton Woods system was ofcially dissolved in 1971? O The U.S. suffered growing balance-of-payments decits. 0 Temporary economic changes in some of the member countries deviated equilibrium exchange rates from targeted rates. 0 The International Monetary Fund (IMF) refused to continue supervising the exchange rate practices of member countries. True or False: With either dollarization or currency boards, interest rates must be different from the reserve currency country's prevailing rates. 0 True 0 False