Under the gold standard,if one US 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 ________.
A) $1 = £4
B) $2 = £1
C) $4 = £1
D) $1 = £2

Question

Quizplus · Accepted Answer

Under the gold standard, the exchange rate is determined by the amount of gold each currency can be exchanged for. Since $1 is equivalent to 0.5 ounces of gold and £1 is equivalent to 1 ounce of gold, £1 is worth twice as much gold as $1. Therefore, the exchange rate is $2 = £1.

Under the Gold Standard,if One US Dollar Could Be Traded