Asked by Lindsey Hagen on Jul 24, 2024
Verified
Under an international gold standard,
A) a nation's exchange rate is virtually fixed.
B) domestic output and the price level will fall in those nations receiving international gold flows.
C) a nation's balance of payments surplus will be corrected by an outflow of gold.
D) a nation's balance of payments deficit will be corrected by an inflow of gold.
Gold Standard
A monetary system in which the standard economic unit of account is based on a fixed quantity of gold.
International Flows
The movement of goods, services, capital, and people across international borders.
Balance of Payments
A comprehensive record of all economic transactions between the residents of a country and the rest of the world in a specific period.
- Absorb the foundational elements of the gold standard, noting its influence on international monetary policy and the balancing of payments adjustments.
Verified Answer
MS
Magdy SalehJul 28, 2024
Final Answer :
A
Explanation :
Under an international gold standard, a nation's exchange rate is virtually fixed because the value of its currency is directly linked to a specific amount of gold. This system stabilizes exchange rates by providing a fixed value for each currency in terms of gold.
Learning Objectives
- Absorb the foundational elements of the gold standard, noting its influence on international monetary policy and the balancing of payments adjustments.