Calculate exchange value of the pound

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Reference no: EM1367516

Assume that under the Bretton Woods system, dollar is pegged to gold at a rate of $35 a ounce and pound sterling is pegged to the dollar at a rate of $2 = £1. If the dollar is devalued against gold and the pegged rate is changed to $40 per ounce, what does this imply for the exchange value of the pound? Explain your answer.

Reference no: EM1367516

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