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?
scratch that out it's A ? forget i said c
It is A. Yes
can you help me with more
The correct answer is not (c). European economies were not directly tied to the US economy as a result of their collapse after World War I. The correct answer is actually option (a), which states that they all adhered to the gold standard.
To understand this, let's first explain what the gold standard is. The gold standard is a monetary system in which a country's currency is directly convertible into a fixed amount of gold. In other words, each unit of currency represents a specific amount of gold that can be redeemed upon demand.
During the 1920s, many countries, including the United States and several European nations, were on the gold standard. This meant that their currencies were pegged to a fixed amount of gold. The exchange rates between different currencies were determined by their respective gold values.
So, how does this tie European economies to the US economy and relate to the stock market crash of 1929? Well, the US stock market crash had a global impact because the US economy was a major player in international trade and finance. The crash led to a severe economic downturn in the United States, causing a decrease in consumer spending, investment, and production.
As a result, the US economy contracted, and this had a ripple effect on other countries, including European nations. Because these European countries were on the gold standard, their currencies were directly linked to the US dollar and its value in terms of gold. Therefore, when the US economy suffered, the value of the US dollar decreased, which in turn affected the value of European currencies.
This had several consequences for European economies. For instance, a weaker US dollar made American imports more expensive, which reduced European demand for US goods. Additionally, the decrease in investment and trade between the US and Europe had negative effects on European businesses and industries, leading to bankruptcies, layoffs, and a decline in economic activity.
So, in summary, the tie between European economies and the US economy during the stock market crash of 1929 was through the gold standard. European countries adhered to the gold standard, which meant their currencies were directly linked to the US dollar and its value, making them susceptible to the economic downturn in the United States.