The breakdown of the Bretton Woods accord caused _____ volatility to increase.
A)interest rate
B)inflation rate
C)exchange rate
D)commodity price
E)option price

Question

Quizplus · Accepted Answer

The Bretton Woods accord established a fixed exchange rate system, where currencies of member countries were pegged to the U.S. dollar, and the U.S. dollar was pegged to gold. However, this system collapsed in the early 1970s, leading to a floating exchange rate system, where exchange rates were determined by market forces. This increased exchange rate volatility as currencies fluctuated based on changes in supply and demand, economic fundamentals, and speculation.

The Breakdown of the Bretton Woods Accord Caused _____ Volatility