Question

Arrange the following elements in correct chronological sequence (earliest to latest):
(A) Smithsonian Agreement
(B) Bretton Woods Conference
(C) Establishment of WTO
(D) Gold Standard
Choose from the options given below:

• A. (A), (B), (C), (D)
• B. (D), (B), (A), (C)
• C. (D), (A), (B), (C)
• D. (C), (B), (D), (A)

Answer 1

The Correct Option is B

The task requires arranging the given economic events in chronological order. We need to identify the timeline of each event: 

• Gold Standard - Started in the 19th century and collapsed in the 1930s. It is the earliest among the listed events, as it was the primary monetary system before Bretton Woods.
• Bretton Woods Conference - Held in 1944, this conference established the Bretton Woods system and International Monetary Fund (IMF) and World Bank post-World War II.
• Smithsonian Agreement - This was an international monetary agreement in 1971 that adjusted exchange rates and expanded SDRs after the breakdown of the Bretton Woods system.
• Establishment of WTO - The World Trade Organization was established in 1995, replacing GATT to manage international trade agreements.

Based on the order of historical occurrence, the correct sequence is:(D) Gold Standard, (B) Bretton Woods Conference, (A) Smithsonian Agreement, (C) Establishment of WTO, corresponding to (D), (B), (A), (C)

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Answer 2

The Gold Standard was widely used in the 19th century, where the value of a country's currency was directly linked to a specific amount of gold. This system helped provide stability in international trade, as currencies were backed by a tangible asset. However, it was eventually abandoned due to limitations in expanding the money supply to accommodate growing economies.

In 1944, the Bretton Woods Agreement was established at a conference in Bretton Woods, New Hampshire. This system set up fixed exchange rates where currencies were pegged to the U.S. dollar, which was convertible to gold. The Bretton Woods system aimed to provide stability and promote international economic cooperation in the post-World War II era, but it collapsed in the early 1970s due to issues related to the U.S. gold reserves.

In 1971, the Smithsonian Agreement was reached to address the collapse of the Bretton Woods system. It marked a shift to a system of flexible exchange rates, where currencies were no longer fixed to the U.S. dollar or gold. The agreement adjusted the value of the U.S. dollar and allowed countries to let their currencies float in value relative to each other.

Finally, in 1995, the World Trade Organization (WTO) was established to regulate international trade, replacing the General Agreement on Tariffs and Trade (GATT). The WTO focuses on promoting free trade, resolving trade disputes, and ensuring that trade flows smoothly and predictably between nations.