Some economists speak of a new Bretton Woods or Bretton Woods II. China and other less developed nations were involved in this international monetary system as was the United States. This question is about Bretton Woods and Bretton Woods II. a. In what two ways did the Bretton Woods I system (1947-1971) resemble the gold exchange standard? Give two ways in which it was different.

b. What happened to the current account deficit between 1945 and the late 1960s of European countries like France and Germany? Why was this surprising? Give two reasons this outcome upset the French and Germans. Give one or two actions the Germanys could have taken to make themselves happier or to alter the "imbalances"? What did the US about its deficits in the late 1960s and early 1970s? What happened in 1971 to the German mark and other major currencies and what happened to the value of the US dollar in terms of other currencies?

c. Between 1998 and about 2010 economists observed something about the US trade balance and current account? What was it? Was this a problem for the China? How would an appreciation of the Chinese currency against the dollar have helped the US? How might it have been problematic for the US? Start by explaining what would have happened to US imports from China and then explain the potential effect on US interest rates and why this might be undesirable.