ECONOMICS
FEDERAL RESERVE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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a system in which the basic unit of currency is equivalent to, and can be exchanged for, a specific amount of gold
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currency backed by the FED and issued by commercial banks
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currency that must be accepted for payment of all debts public and private
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a bank that can lend to other banks in times of need, or a “banker’s bank”
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Detailed explanation-1: -The gold standard is a monetary system where a country’s currency or paper money has a value directly linked to gold. With the gold standard, countries agreed to convert paper money into a fixed amount of gold. A country that uses the gold standard sets a fixed price for gold and buys and sells gold at that price.
Detailed explanation-2: -gold standard, monetary system in which the standard unit of currency is a fixed quantity of gold or is kept at the value of a fixed quantity of gold. The currency is freely convertible at home or abroad into a fixed amount of gold per unit of currency.
Detailed explanation-3: -gold-exchange standard, monetary system under which a nation’s currency may be converted into bills of exchange drawn on a country whose currency is convertible into gold at a stable rate of exchange.
Detailed explanation-4: -Because the central bank must always be prepared to give out gold in exchange for coin and currency upon demand, it must maintain gold reserves. Thus, this system ensures that the exchange rate between currencies remains fixed.
Detailed explanation-5: -In the simplest terms, the gold standard is a monetary system that ties a currency’s value directly with gold. Therefore, the currency can be exchanged for a set amount of gold and is guaranteed by the government.