Under a gold exchange standard
A) all currencies are directly convertible into gold at fixed rates.
B) the monetary price of gold is allowed to fluctuate freely in response to supply and demand.
C) balance-of-payments surpluses and deficits will not occur.
D) gold is directly convertible into special drawing rights called paper gold.
E) the dollar is convertible into gold at a fixed price, and thus other currencies via fixed exchange rates are indirectly convertible into gold.

Question

Quizplus · Accepted Answer

Under a gold exchange standard, the US dollar is directly convertible into gold at a fixed price, and other currencies are indirectly convertible into gold via fixed exchange rates. This means that other currencies can be exchanged for US dollars and then for gold at the fixed rate. The monetary price of gold may still fluctuate in response to supply and demand, and balance-of-payments surpluses and deficits can still occur. Gold is not directly convertible into paper gold, but rather paper gold refers to claims on gold held by central banks or other international organizations.

Under a Gold Exchange Standard