Sunday, September 24th 2017

Gold Standard


Gold Standard Meaning:
A monetary system in a country where it is agreed that paper money can be exchanged for a pre-set quantity of physical gold. The period between 1880 and 1914 was the heyday of the gold standard, with the majority of countries agreeing to a gold standard for their domestic currencies.

Gold Standard Example:
When countries use the gold standard, they exchange gold in order to resolve trade deficits. For example, If Country A exports a higher value of goods to Country B than it imports from them, then Country B would ship gold to Country A for the value of the difference. Country A would then be able to print more paper money, as it would have more gold to support it.
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