When all currencies are tied directly to gold, then
A) currency exchange rates throughout the world are flexible.
B) currency exchange rates throughout the world are fixed.
C) the world's stock of gold cannot change.
D) the price of each nation's currency in terms of gold is flexible.

Question

Quizplus · Accepted Answer

When all currencies are tied directly to gold, currency exchange rates are fixed because the value of each currency is fixed in terms of the amount of gold it can be exchanged for. The world's stock of gold can change but it would not affect the fixed exchange rates between currencies.

When All Currencies Are Tied Directly to Gold, Then