12. Refer to the article shown below titled "The Nixon Shock Heard 'Round the World". The graph shows the value of a dollar at the end of 1970 decreased in real terms to $0.18 by the middle of 2011. Assume the inflation rate was zero from the middle of 2011 to the end of 2011 so that the purchasing power of the dollar remained at $0.18 at the end of 2011. What was the average inflation rate in the U.S. over the 41 years shown in the table? a. b. c. d. e. 2.00% 4.10% 4.56% 4.68% 4.80% 13. The article referenced in question 12 also notes that the price of gold rose from $35 a troy ounce to $800. But it reached $800 at the end of 1979. What was the compound average annual return from gold during those nine years? [This is when the Golden Rule, which had been "Do unto others as you would have them do unto you", was changed to "He who has the gold makes the rules".] a. b. c. d. e. 10.91% 22.86% 25.40% 41.58% 242.86% The Nixon Shock Heard 'Round the World By severing the dollar's convertibility to gold in 1971, the president ushered in a decade of inflation and economic stagnation y LEWIS E.LEHRMAN The Wall Street Journal AUGUST 15, 2015 On the afternoon of Friday, Aug. 13, 1971, high-ranking White House and Treasury Department officials gathered secretly in President Richard Nixon's lodge at Camp David. Treasury Secretary John Connally, on the job for just seven months, was seated to Nixon's right. During that momentous afternoon, however, newcomer Connally was front and center, put there by a solicitous president. Nixon, gossiped his staff, was smitten by the big, self-confident Texan whom the president had charged with bringing order into his administration's bumbling economic policies. In the past, Nixon had expressed economic views that tended toward "conservative" platitudes about free enterprise and free markets. But the president loved histrionic gestures that grabbed the public's attention. He and Connally were determined to present a comprehensive package of dramatic measures to deal with the nation's huge balance of payments deficit, its anemic economic growth, and inflation President Nixon poses after delivering a nationwide television address loaded with economic news on Aug. 15, 1971. Dramatic indeed: They decided to break up the postwar Bretton Woods monetary system, to devalue the dollar, to raise tariffs, and to impose the first peacetime wage and price controls in American history. And they were going to do it on the weekend-heralding this astonishing news with a Nixon speech before the markets opened on Monday The cast of characters gathered at Camp David was impressive. It included future Treasury Secretary George Shultz, then director of the Office of Management and Budget, and future Federal Reserve Chairman Paul Volcker, then undersecretary for monetary affairs at Treasury. At the meeting that afternoon Nixon reminded everyone of the importance of secrecy. They were forbidden even to tell their wives where they were. Then Nixon let Connally take over the meeting The most dramatic Connally initiative was to "close the gold window," whereby foreign nations had been able to exchange U.S. dollars for U.S. gold-an exchange guaranteed under the monetary system set up under American leadership at Brettoin Woods, N.., in July 1944, Recently the markets had panicked. Great Britain had tried to redeem $3 billion for American gold So large were the official dollar debts in the hands of foreign authorities that America's gold stock would be insufficient to meet the swelling official demand for American gold at the convertibility price of $35 per ounce On Thursday, Connally had rushed to Washington from a Texas vacation. He and Nixon hurriedly decided to act unilaterally, not only to suspend convertibility of the dollar to gold, but also to impose wage and price controls. Nixon's speechwriter William Safire attended the conference in order to prepare the president's speech to the nation. In his book "Before the Fall, Safire recalled being told on the way to Camp David that closing the gold window was a possibility. Despite the many international ramifications of what the administration would do, no officials from the State Department or the National Security Council were invited to Camp David