During the 60s, the United States' trade deficit grew. The U.S. dollar was losing some of its status and people were increasingly exchanging it for gold. In 1971, President Nixon suspended the dollar's convertibility into gold and devalued the American dollar in terms of gold and other currencies. QUESTION: What are likely consequence(s) (good or bad) of Nixon's abandonment of the gold standard and devaluation of the U.S. dollar? Select ALL relevant answers, if any. American gold reserves would be depleted. American exports would increase The U.S. could more easily finance a war through inflation (by 'printing money'). American trading partners would become less competitive (their goods will be pricier), unless they also devalue their currencies. American consumers would pay more for imported products.
During the 60s, the United States' trade deficit grew. The U.S. dollar was losing some of its status and people were increasingly exchanging it for gold. In 1971, President Nixon suspended the dollar's convertibility into gold and devalued the American dollar in terms of gold and other currencies. QUESTION: What are likely consequence(s) (good or bad) of Nixon's abandonment of the gold standard and devaluation of the U.S. dollar? Select ALL relevant answers, if any. American gold reserves would be depleted. American exports would increase The U.S. could more easily finance a war through inflation (by 'printing money'). American trading partners would become less competitive (their goods will be pricier), unless they also devalue their currencies. American consumers would pay more for imported products.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:During the 60s, the United States' trade deficit grew. The U.S. dollar was losing some
of its status and people were increasingly exchanging it for gold. In 1971, President
Nixon suspended the dollar's convertibility into gold and devalued the American
dollar in terms of gold and other currencies.
QUESTION:
What are likely consequence(s) (good or bad) of Nixon's abandonment of the gold
standard and devaluation of the U.S. dollar? Select ALL relevant answers, if any.
American gold reserves would be depleted.
American exports would increase
The U.S. could more easily finance a war through inflation (by 'printing money').
American trading partners would become less competitive (their goods will be
pricier), unless they also devalue their currencies.
American consumers would pay more for imported products.
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