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QUESTION 2

What caused the international financial system, set up at the end of WWI, to collapse?

A. The rise of Hitler led to an economic boycott by the western democracies, which significantly hurt international trade.

B. The shock of the Soviet Union's removal from the global economy hurt international trade, leading to a collapse of the system set up by Britain and the United States.

C. The United States, under Herbert Hoover, refused to modify the reparation and debt repayment plans that came out of the war. U.S. credit had fueled the financial system of debts and reparations, and so when U.S. credit declined, the cycle of reparation and debt payments stopped.

D.

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Final answer:

The collapse of the international financial system post-World War II was influenced by factors like the abandonment of the gold standard, disruptions caused by World War II, and the implementation of the Bretton Woods system with fixed exchange rates.


Explanation:

The collapse of the international financial system post-World War II was largely caused by a combination of factors, including the abandonment of the gold standard in the 1930s during the Great Depression, World War II disrupting trade, and the establishment of the Bretton Woods system in 1944 with fixed exchange rates.

Additionally, US credit decline played a significant role in the collapse as the system heavily relied on US credit for debts and reparations, which stopped when the US credit declined, leading to economic instability.

The Marshall Plan implemented by the US to aid Europe's recovery post-WWII and the shift towards regulated free markets contributed to global economic growth in the following decades.


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