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1. The Gold Standard was the equivalence of the county’s currency in exchange for gold. For example, in 1933, the United States price of gold was $20.67. Domestically The Gold Standard regulated the quantity and growth rate of a country’s money supply, and internationally it determined exchange rates for participating countries as well. Because these exchange rates were fixed, this cause the price levels around the world to move together through an automatic balance-of-payments adjustment process. If one country was able to increase its production rate, this would cause a drop in prices, which would lead to more exports and the transfer of money from one country to another. The Gold Standard assured long-term price stability, but it also caused prices to be very unstable in the short-term. This is because of gold discoveries occurring around the world at unpredictable times. Many counties also did not follow the “Rules of the Game”, which caused the Gold …show more content…
In 1834, the United States switched to the gold de facto and in 1900 the United States Congress passed the Gold Standard Act. The gold de facto, replaced a bimetallic system, which included the use of gold and silver. Gold was used throughout the years domestically, with examples like in 1933 when Roosevelt nationalized gold owned by private citizens and abrogated contracts in which the payment would be in gold. The Gold Standard broke down during WWI, when the value of gold was at half as the U.S. dollar experienced a doubling of its price level. It was brought back and modified several times since then. From 1925 to 1931 it was known as the Gold Exchange Standard, from 1946 to 1971 there was the Bretton Woods System. All modifications of the Gold Standard include the exchange for the county’s currency for gold, but slowly the gained the inclusion of dollars for dollars. On August 15, 1971, President Nixon abolished the Gold Standard by announcing that the U.S. would no longer exchange dollars for

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