To maintain a functioning gold standard:
A) nations are obliged to exchange any amount of issued paper money for gold.
B) paper money is not allowed; all transactions must be in coins or gold.
C) the monetary authority cannot exchange currency for gold.
D) care must be taken to keep inflation under 10%.

Question

Quizplus · Accepted Answer

In a gold standard, nations are obliged to exchange any amount of issued paper money for gold. This is necessary to ensure that the value of a currency remains stable and is backed by a tangible asset. Without this requirement, there may be a risk of inflation or devaluation of the currency.

To Maintain a Functioning Gold Standard