The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4

-A country on a gold standard was able to maintain people's confidence in the value of its currency by:
A)printing more and more paper money.
B)restricting international exchange of goods and services.
C)ensuring the convertibility of paper money into gold.
D)maintaining a fixed stock of foreign currencies.
E)ensuring balance of payment surplus.

Question

The figure below shows the demand (D) and supply (S) curves of cocoa in the U.S.Figure 21.4
 
-A country on a gold standard was able to maintain people's confidence in the value of its currency by:
A)printing more and more paper money. 
B)restricting international exchange of goods and services. 
C)ensuring the convertibility of paper money into gold. 
D)maintaining a fixed stock of foreign currencies. 
E)ensuring balance of payment surplus.

Quizplus · Accepted Answer

A country on a gold standard maintains people's confidence in the value of its currency by ensuring the convertibility of paper money into gold. This means that individuals can exchange their paper currency for a fixed amount of gold, which serves as a guarantee of the currency's value. By maintaining this convertibility, the country can limit the amount of paper currency in circulation and prevent excessive inflation.

The Figure Below Shows the Demand (D) and Supply (S)