Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: Open Economy Macro Economics

Question:

If 1 dollar = 5 gram of gold and 1 pound = 10 gram of gold, then the exchange rate would be 1 pound = 2 dollar. Which of the following exchange rates are we taking about?

Options:

Gold standard system of exchange rate

The Bretton Woods system

The Millennium exchange rate

The Prodigy exchange rate system

Correct Answer:

Gold standard system of exchange rate

Explanation:

According to "Gold standard system of exchange rate", gold was taken as the common unit of parity between currencies of different countries. Every country defined its value in terms of gold.