Suppose you travel from the US to Japan and trade some American dollars for Japanese Yens. You will notice there is an exchange rate, say 100 Yens for 1 US Dollar. You may also notice the exchange rate varies from day to day. Do you know why?
Before, all the currency was backed in gold. That means that the value of gold was fixed. In the 1930's, 1 oz of gold was worth 35 US Dlls. After WW2 many countries based the value of their currencies

After a while the US Dollar was affected by inflation. That means that one dollar could no longer buy the same amount of goods it did before. In 1971 the US government was forced to eliminate the gold standard.

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