Question

In 60 words or fewer, explain in your own words how closing the gold window turned the U.S. dollar into a fiat currency.

Answer 1

Closing the gold window turned the U.S. dollar into a fiat currency by severing the direct convertibility of the dollar into gold. Prior to the closure, the U.S. government guaranteed that dollars could be exchanged for a fixed amount of gold. However, after the gold window was closed in 1971, the dollar's value became detached from any physical backing, making it a fiat currency backed by trust and the faith of the people.

Answer 2

Answer: With inflation on the rise and a gold run looming, President Richard Nixon's team enacted a plan that ended dollar convertibility to gold and implemented wage and price controls, which soon brought an end to the Bretton Woods System.

Explanation: