Which of the following is not a condition of the international gold standard?
A) A nation must be willing to accept very wide ﬂuctuations in its exchange rate.
B) A nation must allow gold to be freely exported and imported.
C) A nation must be willing to convert gold into paper money and vice versa at a stipulated rate.
D) A nation must deﬁne its monetary unit in terms of a certain quantity of gold.

Question

Quizplus · Accepted Answer

The international gold standard did not require a nation to accept very wide fluctuations in its exchange rate. In fact, the standard was designed to stabilize exchange rates by anchoring currencies to a fixed quantity of gold. In order to maintain this stability, participating nations had to allow gold to be freely exported and imported, define their monetary unit in terms of a certain quantity of gold, and be willing to convert gold into paper money and vice versa at a stipulated rate.

Which of the Following Is Not a Condition of the International