The U.S.inflation of the 1960s was spread overseas via the ________ exchange rates of the time and led to the ________ of the Bretton Woods system.
A)fixed,collapse
B)fixed,establishment
C)flexible,collapse
D)flexible,establishment

Question

Quizplus · Accepted Answer

During the 1960s, the U.S. had a fixed exchange rate system under the Bretton Woods system. However, the U.S. inflation led to pressure on the value of the U.S. dollar, which was fixed to gold. As a result, other countries began to have doubts about the U.S. ability to maintain the value of its currency and started converting their dollars into gold. This led to a depletion of U.S. gold reserves, which eventually forced the U.S. to abandon the fixed exchange rate system and led to the collapse of the Bretton Woods system in 1971. Therefore, choice A is the best answer as it correctly identifies the fixed exchange rates of the time and the collapse of Bretton Woods system.

The USInflation of the 1960s Was Spread Overseas Via the ________