Which of the following was a reason that led to the collapse of the gold standard in 1939?
A)difficulty and complexity in using the gold standard to determine the exchange rate
B)agreement by governments to convert paper currency into gold on demand at a fixed rate
C)cycle of competitive currency devaluations by various countries
D)expansion in the volume of international trade in the wake of the Industrial Revolution
E)inability of the gold standard to act as a mechanism for achieving balance-of-trade equilibrium by all countries

Question

Quizplus · Accepted Answer

The cycle of competitive currency devaluations by various countries was a significant reason for the collapse of the gold standard in 1939. As countries faced economic difficulties during the Great Depression, they devalued their currencies to make their exports cheaper and gain a competitive advantage. This cycle of devaluation led to a loss of confidence in the gold standard and eventually its collapse. The other options listed were not significant factors in the collapse of the gold standard in 1939.

Which of the Following Was a Reason That Led to the Collapse