The 'Nixon Shock' of 1971 effectively ended the Bretton Woods System by:
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Correct answer: Suspending the convertibility of the U.S. dollar into gold
Facing high inflation and a massive trade deficit, President Nixon ended the gold standard. This moved the world toward a system of floating exchange rates, where currency values are determined by market forces.
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More Bretton Woods System questions
- Why did the Bretton Woods System face a 'liquidity problem' in the 1960s known as the Triffin Dilemma?
- The Bretton Woods System was designed to avoid the 'beggar-thy-neighbor' policies of the 1930s, which included:
- Which of the following was a major criticism of the Bretton Woods institutions by developing 'Global South' nations?
- What role did the General Agreement on Tariffs and Trade (GATT) play alongside the Bretton Woods System?
- How did the Marshall Plan interact with the early Bretton Woods System?
- The term 'adjustable peg' in the context of Bretton Woods meant that: