ECONOMICS
FOREIGN CURRENCY MARKETS
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
true
|
|
|
false
|
|
|
Either A or B
|
|
|
None of the above
|
Detailed explanation-1: -The Gold Standard was a system under which nearly all countries fixed the value of their currencies in terms of a specified amount of gold, or linked their currency to that of a country which did so.
Detailed explanation-2: -The flexible exchange rate system is also called the floating exchange rate system.
Detailed explanation-3: -The gold standard was abandoned due to its propensity for volatility, as well as the constraints it imposed on governments: by retaining a fixed exchange rate, governments were hamstrung in engaging in expansionary policies to, for example, reduce unemployment during economic recessions.
Detailed explanation-4: -The gold standard is a monetary system where the value of a country’s paper money or currency was linked directly to gold. Such currencies could be freely converted into a fixed amount of gold. Under this system, the imports and exports of gold were free of restrictions.