Under a pure gold standard,
A)exchange rates float most of the time.
B)money is worth more than under other systems.
C)nations must buy and sell gold to settle international obligations.
D)there is no inflationary pressure.

Question

Quizplus · Accepted Answer

Under a pure gold standard, nations must buy and sell gold to settle international obligations. The value of a country's currency is directly tied to the value of gold, and therefore, they must exchange their currencies for gold in order to settle debts or obligations with other countries. This creates a fixed exchange rate system, limiting the ability of countries to manipulate their currency or devalue it. However, there can still be inflationary pressure depending on the supply and demand for gold.

Under a Pure Gold Standard