Question

The financial side of the Bretton Woods system collapsed in the early 1970s, replaced by a new system for dealing with the relationship among currencies. In one sentence, what was that new system?

a) The Gold Standard
b) The Plaza Accord
c) The Nixon Shock and the shift to a floating exchange rate system
d) The Washington Consensus promoting free-market policies

Answer 1

The system that succeeded the Bretton Woods system was the Nixon Shock and the shift to a floating exchange rate system, initiated by President Nixon in 1971 when the U.S. stopped converting dollars into gold.

Step-by-step explanation:

The new system that replaced the Bretton Woods system after its collapse in the early 1970s was c) The Nixon Shock and the shift to a floating exchange rate system. This system came into effect after President Richard Nixon's announcement in August 1971, which ended the conversion of the dollar into gold and led to the dollar's devaluation. The abandonment of the Bretton Woods monetary system, where the value of currencies was fixed to gold, resulted in currencies being valued based on trust and their perceived value in the market, marking the beginning of the floating exchange rate system.