Economics of Macro Issues 7th Edition by Roger LeRoy Miller,Daniel Benjamin

Exercise 4

From shoutly after World War II to the early 1970's the United States (like many countries) was on a system of fixed exchange rates. That is, the U.S. government pledged to take whatever actions were necessary to keep the value of the dollar fixed relative to other currencies. Consider the emergence of the Beatles in the 1960's.What would the U.S. government have to do to prevent the value of the dollar from changing as a result of "Beatlemania" in America? Alternatively, consider the introduction of the popular Boeing 707 in the 1950's. What would the U.S. government have to do to prevent the value of the dollar from changing as a result?