Question

The exchange rates between currencies were determined by the amount of gold in each currency under the gold standard. The gold standard collapsed because?

1) Countries abandoned the gold standard and adopted fiat currencies
2) The amount of gold in each currency became unequal
3) The value of gold decreased significantly
4) The exchange rates were no longer stable

Answer 1

The gold standard collapsed because countries abandoned it and adopted fiat currencies, as well as unequal amounts of gold causing instability in exchange rates.

Step-by-step explanation:

The gold standard collapsed because countries abandoned the gold standard and adopted fiat currencies. This shift allowed governments to have more control over their currencies, as they were no longer tied to the value of gold. Additionally, the gold standard became unsustainable due to the unequal amount of gold in each currency, leading to instability in exchange rates.