Asked by Laney Ankney on Jul 16, 2024
Verified
Under the gold standard,
A) nations can protect their domestic price and employment levels from changes in the volume and direction of world trade.
B) exchange rates are virtually fixed.
C) differences in exports and imports will be precisely balanced by capital account flows, excluding gold.
D) exchange rates fluctuate freely in response to changes in the supply of, and demand for, foreign currencies.
Gold Standard
A monetary system in which the value of a country's currency is directly linked to the amount of gold held in reserve.
Domestic Price
The price of a good or service within a country, determined by domestic demand and supply.
Employment Levels
The number or percentage of people within a population who are currently employed, indicating the health of an economy.
- Gain insight into the basic tenets of the gold standard, along with its repercussions on worldwide monetary policy and balance of payments modifications.
Verified Answer
SM
Spiritual MotivationJul 21, 2024
Final Answer :
B
Explanation :
Under the gold standard, exchange rates between currencies are fixed based on a specific amount of gold. This system ensures that the value of each currency relative to others is stable, as long as the countries adhere to the rules of the gold standard.
Learning Objectives
- Gain insight into the basic tenets of the gold standard, along with its repercussions on worldwide monetary policy and balance of payments modifications.