Important FACTs for midterm 3 Flashcards
1
Q
Why did Europe’s return to gold cause the great deflation of 1929?
A
Since the US was on the gold standard, the increase in the gold price triggered a decrease in US prices (since the currency technically becomes more valuable)
2
Q
Why did the US devalue the redemption price of gold from 20.67 to 35?
A
To attempt to instigate inflation, and therefore curb the appreciation of the currency. Was unnecessary though, since the US exited the gold standard in the same year.
