Under the gold standard, if one United States dollar could be traded for one half ounce of gold, and one British pound could be redeemed for one ounce gold, the exchange rate would be:

Question

Quizplus · Accepted Answer

Under the gold standard, if $1 buys 0.5 ounces of gold and £1 buys 1 ounce of gold, then £1 buys twice as much gold as $1. Therefore, $2 would be equivalent to £1 to maintain the value in terms of gold.

Under the Gold Standard, If One United States Dollar Could