4. Bretton Woods Suppose that after World War II, the United States and France agree to peg their currencies to each other under the Bretton Woods system at an exchange rate of $2.00 per franc. Suppose American demand for francs decreases, and the equilibrium dollar price of a franc falls to $1.00 per franc. Which of the following actions could the U.S. government use under Bretton Woods to help eliminate the balance-of-payments imbalance at the pegged exchange rate? a.Use monetary policy to increase real interest rates in the United States
b.Use dollars to buy French francs in the foreign exchange market c.Borrow French francs from the IMF and use the francs to buy dollars