Under a gold standard, the central bank is willing to
A) use the federal funds rate to conduct monetary policy.
B) convert its currency into gold on demand.
C) let the price of gold be determined on the free and open market.
D) make the monetary base consistent of only gold.
E) publish its expected inflation rate.

Question

Quizplus · Accepted Answer

Under a gold standard, the central bank is required to convert its currency into gold on demand, meaning that the currency is backed by gold. This helps to maintain the value of the currency and prevent inflation.

Under a Gold Standard, the Central Bank Is Willing to