The Bretton Woods system a. ended in 1971 b. ended in 1939 when World War II began c. is currently the basis for the international monetary system d. is currently in use only by the major industrial nations

The correct answer is A. The Bretton Woods system ended in 1971.

Explanation:

The Bretton Woods system was a fixed exchange rate system in which the exchange rate for countries' currencies against the US dollar was fixed. From 1945 to 1971, it regulated exchange rates for member countries of the International Monetary Fund (IMF).

In July 1944, an international conference was held in the small town of Bretton Woods, New Hampshire, with participants from 44 nations. It was decided to set up the International Monetary Fund and the Bretton Woods system, the latter being used until the early 1970s.

The agreement meant that the member countries joined a fixed exchange rate system, which set the exchange rate for the country's currency against the US dollar. Instead, the US guaranteed a fixed redemption price of the dollar in gold. Exchange rate changes were made only to adjust for "basic imbalances" in the balance of payments. In practice, the agreement meant an end to repeated and drastic devaluations of local currencies in search of competitiveness in the export market. Earlier currency restrictions could also be lifted, with the result that international trade could increase.  

The system was aborted in 1971, when the United States decided to no longer guarantee the dollar value with a fixed redemption price in gold, called the "Nixon shock". By then, the United States had already let the dollar exchange rate float in 1968. The reasons were, among other things, in the extremely costly Vietnam War for the United States. The result was that other currencies with previously fixed exchange rates also floated. The Bretton Woods system formally ceased in 1973, after vain attempts to stabilize key currencies.

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