When the stock market crashed in 1929, it had a ripple effect that impacted European nations, among others. In what specific way were European economies tied to the US economy?
a.They all adhered to the gold standard.
b.All were awaiting repayment by Germany.
c.Their economies had all collapsed after WWI.
d.The banks had closed in all of these nations.
d?
It's A
Yep A
its A
Its C........jk its A
its A
The correct answer is not option d, but rather option a. European economies were tied to the US economy because they all adhered to the gold standard.
To understand why this is the correct answer, let's break it down:
The gold standard was a monetary system in which the value of a country's currency was directly linked to a fixed amount of gold. Under this system, currencies were backed by gold reserves held by the government, and the exchange rate between different currencies was determined by the corresponding gold prices.
During the 1920s, many European countries had adopted the gold standard, including the United States. This meant that their currencies, such as the British pound, French franc, and German mark, were all pegged to a fixed amount of gold.
When the stock market crashed in the United States in 1929, it triggered a severe economic downturn, known as the Great Depression. The US economy contracted, causing a decline in demand for goods and a rise in unemployment.
As a result, European nations that were tied to the US economy through the gold standard suffered from the economic repercussions. The decline in US demand for European goods led to a decrease in exports, which impacted European industries and caused mass unemployment in those countries. Additionally, the global financial system became unstable as the US economy faltered, leading to capital outflows and a reduction in investments in European nations.
Therefore, the ripple effect of the stock market crash in 1929 on European nations was largely due to the interconnectedness of their economies through the gold standard.