The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2

-Under both the gold standard and the gold exchange standard countries bought and sold U.S. dollars to maintain a fixed exchange rate with the dollar.

Question

The figure given below depicts the foreign exchange market for British pounds traded for U.S. dollars.Figure 22.2
 
-Under both the gold standard and the gold exchange standard countries bought and sold U.S. dollars to maintain a fixed exchange rate with the dollar.

Quizplus · Accepted Answer

Under the gold standard, countries maintained a fixed exchange rate through the direct exchange of gold, not U.S. dollars. The gold exchange standard involved holding U.S. dollars as reserves to maintain a fixed exchange rate, but this was distinct from the direct exchange of gold under the original gold standard.

The Figure Given Below Depicts the Foreign Exchange Market for British