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Question

A gold standard is a monetary system wherein the exchange rate is determined by which of the following?

A
The supply of available gold.
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B
The Minister of Finance.
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C
The Bank of Canada.
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D
The price of gold.
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Solution

The correct option is D The price of gold.

Gold standard can refer to several things, including a fixed monetary regime under which the monopoly government currency is fixed and may be freely converted into gold. It can also refer to a freely competitive monetary system in which gold or bank receipts for gold act as the principal medium of exchange; or to a standard of international trade, wherein some or all countries fix their exchange rate based on the relative gold parity values between individual currencies.


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