Under the fixed exchange rate system, the dollar could be devalued onl

QUESTION

Under the fixed exchange rate system, the dollar could be devalued only if all countries agreed to simultaneously revalue against the dollar.

Indicate whether the statement is true or false.

ANSWER

TRUE
Devaluation of the dollar was no easy matter. Under the Bretton Woods provisions, any other country could change its exchange rates against all currencies simply by fixing its dollar rate at a new level. As the key currency in the fixed exchange rate system, the dollar could be devalued only if all countries agreed to simultaneously revalue against the dollar.