question_answer

      Why did the fixed exchange rate system collapsed?

1. The buildup of US debts abroad as a result of the need to fund the war in Vietnam

II. Inflation in the USA

III. Growing doubts about the stability of the US.

A) Only I                          

B) I & II

C) II & III              

D) All the above

Correct Answer: D

Solution :

The system collapsed in 1971 for a variety of reasons, including the buildup of US debts abroad as a result of the need to fund the war in Vietnam, inflation in the USA and growing doubts about the stability of the US.