Problem: While nations of the world had previously tied their currencies to the gold standard, that practice abandoned in favor of linking currencies directly through floating exchange rates. Due to the dominance of the United States in economic and financial matters, the US dollar became the "reserve currency" of the world. Other countries tied their exchange rates to the dollar.
Q1. What responsibilities did that impose on the US? What were the risks to other nations?
Q2. Explain the relationship between the inflation rates in two countries and their exchange rates.