What was a major reason for shifting from gold standard to inconvertible fiat money?
A. Gold was not shiny enough
B. Gold was too rare for jewelry
C. Gold limited the growth of the economy
D. Gold encouraged inflation
Answer (2)
The correct answer is C. Gold limited the growth of the economy.The gold standard restricted the money supply to the amount of gold reserves, which could limit economic growth. Shifting to inconvertible fiat money allowed governments to have more control over the money supply, supporting economic expansion and flexibility in monetary policy.
The correct answer is letter C. Gold limited the growth of the economyUnder the gold standard, countries could only print money if they had enough gold. But this limited economic growth. In times of war or economic need, countries like the U.S. (in 1933) shifted to inconvertible fiat money so they could print more money without needing gold.
