Which description correctly matches a major monetary policy action by the United States in the 20th century?

Which description correctly matches a major monetary policy action by the United States in the 20th century?

• A. Free coinage of silver
• B. The Gold Standard Act
• C. Nixon and the Gold Standard
• D. The Bretton Woods Agreement

Answer: (C)

Switching away from a gold-backed money system and moving to fiat currency represents a fundamental shift in how the government controls the economy. In 1971, the United States effectively ended the gold standard by suspending the dollar’s convertibility into gold, which dismantled the Bretton Woods framework and gave policymakers far more flexibility to manage the money supply and stabilize the economy. This is the major 20th-century monetary policy action because it changed the basis of the currency itself from a gold value to market-determined value, with floating exchange rates becoming the norm. The other options are earlier or different kinds of milestones: free coinage of silver is a 19th-century issue, the Gold Standard Act of 1900 firmly established gold backing, and the Bretton Woods Agreement set up the postwar system of fixed but adjustable rates. Those are important, but the decisive late-20th-century shift described here is the move away from the gold standard under Nixon.

Switching away from a gold-backed money system and moving to fiat currency represents a fundamental shift in how the government controls the economy. In 1971, the United States effectively ended the gold standard by suspending the dollar’s convertibility into gold, which dismantled the Bretton Woods framework and gave policymakers far more flexibility to manage the money supply and stabilize the economy. This is the major 20th-century monetary policy action because it changed the basis of the currency itself from a gold value to market-determined value, with floating exchange rates becoming the norm.

The other options are earlier or different kinds of milestones: free coinage of silver is a 19th-century issue, the Gold Standard Act of 1900 firmly established gold backing, and the Bretton Woods Agreement set up the postwar system of fixed but adjustable rates. Those are important, but the decisive late-20th-century shift described here is the move away from the gold standard under Nixon.