Question

During the Bretton Woods Period the dollar was pegged to the gold at $35/oz. The German mark was pegged to the dollar at DM10/$. If the price of gold in pounds was £17.5/oz. What was the exchange rate between the German mark and the british pound?

Answer 1

Answer: 20 DM/GBP

Explanation:

The exchange rate is determined by following conversion:

$x = (\frac{10 DM}{1 USD})\cdot (\frac{35 USD}{1 oz}) \cdot (\frac{1 oz}{17.5 GBP} ) \\x = 20 \frac{DM}{GBP}$