List the drawbacks of the gold standard. What will be an ideal ...

[CQXA]

List the drawbacks of the gold standard.
 
  What will be an ideal response?

Question 2

A reduction in a country's money supply causes
 
  A) its currency to depreciate in the foreign exchange market.
  B) its currency to appreciate in the foreign exchange market.
  C) does not affect its currency in the foreign market.
  D) does affect its currency in the foreign market in an ambiguous manor.
  E) affects other countries currency in the foreign market.

[tanna.moeller]

Answer to Question 1

1. Undesirable constraints on the use of monetary policy to fight unemployment.
2. A stable overall price level is achieved only if the relative price of gold and all other goods and services is stable.
3. A central bank cannot increase holdings of international reserves as its economy grows unless new gold is discovered.
4. Unfair advantage to gold-producing nations.

Answer to Question 2

B

[CQXA]

Thank you

[tanna.moeller]

Happy to help you