The correct answer is Option 3: Statement 1 is true and Statement 2 is false.
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Statement 1: True. The gold standard system of exchange rate does indeed use gold as the common unit of parity between currencies of different countries. This means that the value of a currency was directly linked to a specific amount of gold.
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Statement 2: False. The Bretton Woods system was a fixed exchange rate system, but it was not the most rigid. While it established fixed exchange rates among member countries, it allowed for some flexibility, such as adjustments in response to economic conditions. In contrast, a completely rigid system would not allow for any adjustments. Gold standard is the most rigid under which gold was taken as the common unit of parity between currencies of different countries.
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