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.
C?
It's A
No, not C.
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https://www.thebalance.com/what-is-the-history-of-the-gold-standard-3306136
No, option c is not correct. The European economies were not tied to the US economy because they had all collapsed after World War I. The correct answer is option a, which states that they all adhered to the gold standard.
To understand why this is the correct answer, let me explain further:
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, countries would exchange their currency for gold at a fixed exchange rate.
During the 1920s, the United States experienced an economic boom, and this led to increased American investments in Europe. European countries, including Germany, relied heavily on American loans and investments to rebuild their economies after World War I.
As the US stock market crashed in 1929, it triggered a global economic crisis. Many American investors began to pull their investments out of European markets, causing a sharp decline in European investments and a loss of crucial capital for European industries.
Furthermore, since the European countries were on the gold standard, the withdrawal of American gold and capital impacted their currency stability. As the US economy weakened, it caused a general loss of confidence in the global financial system and a wave of economic downturn throughout Europe and other parts of the world.
Therefore, the tie between European economies and the US was primarily due to their shared adoption of the gold standard and the subsequent impact of the US stock market crash on investments and confidence in the global financial system.