A problem with the operation of the gold standard in the world economy was that
A) it involved too much government intervention in the economy.
B) the world economy was subject to too much inflation.
C) a country did not have control of its domestic monetary policy.
D) it caused the Great Depression.

Question

Quizplus · Accepted Answer

One of the main problems with the gold standard was that it limited a country's ability to control its domestic monetary policy. Since the value of a country's currency was tied to the amount of gold it held, the government could not increase the money supply to stimulate the economy during a recession, for example. This led to economic instability, as countries were forced to adhere to the fixed exchange rates set by the gold standard, even if it was detrimental to their own economies.

A Problem with the Operation of the Gold Standard in the World