Question

5. Two statements marked as Assertion (A) and Reason [R] are given below. Read them and choose
the most appropriate option.
[1]
ASSERTION [A]: The system of fixed exchange rates collapsed and the system of floating
exchange rates was introduced
REASON [R]: The rising cost of war equipments weakened the US's finances and so it could
not maintain its value in relation to gold.
OPTIONS:
[a] Both A and Rare incorrect
[b]A is true but is not the correct explanation of A
[c] Both A and R are correct
[d] A is incorrect but R is correct​

Answer 1

Answer:

option b

Explanation:

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Answer 2

The given Assertion "The system of fixed exchange rates collapsed and the system of floating  exchange rates was introduced." is correct and the reason "The rising cost of war equipment weakened the US's finances and so it could  not maintain its value in relation to gold." is also correct and is the correct explanation of the given assertion.

So, option (A) Both A and R are correct and and R is the correct explanation of A.

• By 1960s, The US dollar fixed values in relation to gold was becoming overvalued as the cost of equipment in the Vietnam war was rising very much.
• So, the Bretton Wood system of fixed exchange values finally came to an end in the year 1981, and floating exchange rates were finally introduced.