Author Question: Please briefly describe what is meant by a gold exchange standard. What will be an ideal ... (Read 91 times)

xroflmao · **on:** Jun 30, 2018

Please briefly describe what is meant by a gold exchange standard.

What will be an ideal response?

Question 2

If a good is imported into (small) country H from country F, then the imposition of a tariff In country H

A) raises the price of the good in both countries (the Law of One Price).
B) raises the price in country H and does not affect its price in country F.
C) lowers the price of the good in both countries.
D) lowers the price of the good in H and could raise it in F.
E) raises the price of the good in H and lowers it in F.

macybarnes · **Reply #1 on:** Jun 30, 2018

Answer to Question 1

Under a gold exchange standard, central banks' reserves consist of gold and currencies whose price in terms of gold are fixed, and each central bank fixes its exchange rate to a currency with a fixed gold price. The post-WWII currency system was supposed to be a gold exchange standard with the U.S. responsible for fixing the price of gold at 35 per ounce.

Answer to Question 2

B