Which of the following statements characterizes the gold standard?

Question

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The gold standard is a monetary system where a country's currency is directly convertible into gold at a fixed price. This means that a person can exchange a certain amount of currency for a fixed amount of gold. Thus, option A characterizes the gold standard. Option B is incorrect because under the gold standard, a nation's central bank does not have complete control over its money supply. Option C is incorrect because new discoveries of gold do have an effect on money supply and prices under the gold standard. Option D is incorrect because prices are not necessarily constant under the gold standard, as they can fluctuate based on changes in the gold supply and demand.

Which of the Following Statements Characterizes the Gold Standard