Suppose the United States decides to go back on the gold standard.This should

Question

Quizplus · Accepted Answer

Going back on the gold standard would limit the ability of the Federal Reserve to pursue active monetary policy, as it would be constrained by the supply of gold and the exchange rate of the U.S. dollar to gold. This would make it more difficult for the Fed to adjust interest rates or the money supply to stabilize the economy, as it could not simply print more money like it can under a fiat currency system. Therefore, option A is the correct answer. B and C are incorrect as they suggest that going back to the gold standard would make monetary policy more effective, which is not the case. Option D is also incorrect as the gold standard does not necessarily improve the Fed's ability to target inflation, as other factors beyond its control can impact the price level.

Suppose the United States Decides to Go Back on the Gold