gold standard

Examples of gold standard in the following topics:

• The American Dollar and the World Economy

  • Before World War I, the world economy operated on a gold standard, meaning that each nation's currency was convertible into gold at a specified rate.
  • First, under the gold standard, countries could not control their own money supplies; rather, each country's money supply was determined by the flow of gold used to settle its accounts with other countries.
  • Second, monetary policy in all countries was strongly influenced by the pace of gold production.
  • Nations attempted to revive the gold standard following World War I, but it collapsed entirely during the Great Depression of the 1930s.
  • Some economists said adherence to the gold standard had prevented monetary authorities from expanding the money supply rapidly enough to revive economic activity.

• Exchange Rate Systems

  • To ensure that a currency will maintain its "pegged" value, the country's central bank maintain reserves of foreign currencies and gold.
  • The most famous fixed rate system is the gold standard, where a unit of currency is pegged to a specific measure of gold.

• Monetarist

  • Keynes postulated a demand-driven model for currency; a perspective on printed money that was not beholden to the 'gold standard' (or basing economic value off of rare metal).
  • This is particularly important in regards to the U.S. currency, which is considered a standard in international markets.

• Glossary

  • Gold standard: A monetary system in which currencies are defined in terms of a given weight of gold.
  • Standard of living: A minimum of necessities, comforts, or luxuries considered essential to maintaining a person or group in customary or proper status or circumstances.

• The Definition of Money

  • Fiat money is money whose value is not derived from any intrinsic value or guarantee that it can be converted into a valuable commodity (such as gold).
  • However, for most of history, almost all money was commodity money, such as gold and silver coins.
  • Unit of Account: It is a standard numerical unit of measurement of market value of goods, services, and other transactions.
  • A "standard of deferred payment" is an acceptable way to settle a debt--a unit in which debts are denominated.
  • Money can also act a as a standard measure and common denomination of trade.

• Fixed Exchange Rates

  • A fixed exchange rate is a type of exchange rate regime where a currency's value is fixed to a measure of value, such as gold or another currency.
  • A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime where a currency's value is fixed against the value of another single currency, to a basket of other currencies, or to another measure of value, such as gold.

• Introduction to the U.S. Economy: A Brief History

  • In 1492, Christopher Columbus, an Italian sailing under the Spanish flag, set out to find a southwest passage to Asia and discovered a "New World. " For the next 100 years, English, Spanish, Portuguese, Dutch, and French explorers sailed from Europe for the New World, looking for gold, riches, honor, and glory.
  • But the North American wilderness offered early explorers little glory and less gold, so most did not stay.

• Movement South and Westward

  • Nevertheless, a combination of vision and foreign investment, combined with the discovery of gold and a major commitment of America's public and private wealth, enabled the nation to develop a large-scale railroad system, establishing the base for the country's industrialization.

• Commodities and Other Futures

  • Futures traditionally have been linked to commodities such as wheat, livestock, copper, and gold, but in recent years growing amounts of futures also have been tied to foreign currencies or other financial assets as well.

• Changes in Demand and Supply and Impacts on Equilibrium

  • For example, the discovery of a new gold deposit, acts as a shock to the supply of gold, shifting the curve right.