Suppose Montmarinsi has a gold standard exchange rate system. If the price of gold in
Montmarinsi is fixed at 80 monts (the currency of Montmarinsi) per ounce, this means
A) that the gold market cannot reach an equilibrium because of a price control.
B) the government of Montmarinsi was committed to exchanging 1 ounce of gold to anyone who was willing to pay 80 monts.
C) that anyone wishing to buy foreign currency must pay in gold which can be purchased from the government at 80 monts per ounce.
D) that the government is the sole supplier of gold and sets the price of gold.
Correct Answer:
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