8) As a result of the United States suspending gold sales to foreign countries i
ID: 1194991 • Letter: 8
Question
8)
As a result of the United States suspending gold sales to foreign countries in 1968,
the United States had to make sure it ran an ORT surplus.
countries with balance-of-payments surpluses against the United States had to depreciate their exchange rates.
countries with balance-of-payment surpluses against the United States had to allow their economies to expand.
A and B.
the United States had to make sure it ran an ORT surplus.
countries with balance-of-payments surpluses against the United States had to depreciate their exchange rates.
countries with balance-of-payment surpluses against the United States had to allow their economies to expand.
A and B.
Explanation / Answer
The collapse of the gold pool and the refusal of the pool members to trade gold with private entities—on 18 March, 1968 the Congress of the United States repealed the 25% requirement of gold backing of the dollar—as well as the US pledge to suspend gold sales to governments that trade in the private markets, led to the expansion of the private markets for international gold trade, in which the price of gold rose much higher than the official dollar price.The US gold reserves continued to be depleted due to the actions of some nations, notably France,who continued to build up their gold reserves.
Hence correct option is countries with balance-of-payment surpluses against the United States had to allow their economies to expand.
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