The 1973 abandonment of the Bretton Woods system was largely brought about by the
A) bankruptcy of the International Monetary Fund.
B) reestablishment of the gold exchange standard.
C) appreciation of the U.S. dollar.
D) growing U.S. dollar glut in foreign exchange markets.
E) aftermath of Watergate.

Question

Quizplus · Accepted Answer

The growing U.S. dollar glut in foreign exchange markets was the main reason for the abandonment of the Bretton Woods system. Foreign countries were holding too many dollars and began to exchange them for gold, causing a drain on U.S. gold reserves. This ultimately led to the U.S. government no longer being able to maintain the fixed exchange rate system.

The 1973 Abandonment of the Bretton Woods System Was Largely