Why was there very little fluctuation in the foreign exchange rate in the period 1945-1973?
A) This was a period when the world economy was very stable.
B) There was very little growth in the world economy between 1945 and 1973.
C) Countries linked their currency to the U.S. dollar, which was backed by gold reserves.
D) Most currencies were pegged to the British pound, which could be converted to sterling silver.

Question

Quizplus · Accepted Answer

Countries linked their currency to the U.S. dollar, which was backed by gold reserves. This system, known as the Bretton Woods system, limited fluctuations in exchange rates as countries were required to maintain a fixed exchange rate with the US dollar.

Why Was There Very Little Fluctuation in the Foreign Exchange