What was a key flaw in the international currency and exchange rate management system that was exposed by the two World Wars?
Understand the Problem
The question is asking about a fundamental flaw in the global currency and exchange rate system that was revealed during the two World Wars, with multiple-choice options indicating potential flaws.
Answer
Excessive reliance on gold reserves.
The final answer is excessive reliance on gold reserves.
Answer for screen readers
The final answer is excessive reliance on gold reserves.
More Information
The excessive reliance on gold reserves was a significant flaw because the rigid nature of the gold standard could not accommodate the financial demands of wartime economies, leading to economic instability and the eventual abandonment of the gold standard.
Tips
Confusing the dominance of the US dollar with reliance on gold: The gold standard's inflexibility was the primary issue exposed, not the dollar's role, which became significant later.
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