The The gold standard is an international monetary system that e... More is an international monetary system that enables a government of any country to fix the exchange rate between the country’s currency and the per ounce What are value stocks? A value company is a company that app... More of .
The The exchange rate refers to the amount of one currency yo... More between the domestic What is currency? Currencies are the generally accepted medi... More and the other currency in the is then determined by the difference of the What is price? The price is the measure of the value of good... More per ounce of Gold is a precious metal and an important financial commod... More between them.
Advantages and disadvantages
Apart from the fixing of exchange rates, adoption of the gold standard ensures the long-term stability of prices, helping keep Money is a generally accepted medium of exchange to buy and... More supply. A side effect of that is that it suppresses deficit spending by governments, meaning there are unlikely to be negative consequences for the economy, such too-low interests rates or falling .under control as governments can’t then inject vast quantities of bank notes into the economy to boost the
One of the major disadvantages is that gold-producing countries such as Australia is the 6th largest country in the world by area. O... More, The Russian Federation is the world's largest country by a... More, The People's Republic of China (中华人民共和国 in si... More and the U.S. have more economic power than non-gold producing countries as their reserves are larger. The gold standard can restrict economic growth because when paper money is backed by it, it stops a government from boosting the money supply, which means capital can be injected to maintain growth in productive times. Likewise in times of recession, economists believe increasing the money supply can provide struggling companies with much needed capital and consumers with more spending power.
Alongside long-term price stability, the gold standard has also been linked to short-term extreme pricewhich causes uncertainty over the value of for banks and other lenders or borrowers.
The silver standard
The silver standard is an alternative to the gold standard, which fixes exchange rates to the price of an ounce of silver. It was the chief monetary system based on a precious metal for centuries, until the gold standard was adopted in the late 19th century.
Silver has enjoyed brief periods of favour, particularly when countries have reduced the silver content of their coinage in What is a trade order? In trading, an order can be defined... More to boost their silver reserves. However, it has never again enjoyed its high relative value to gold — the silver to gold ratio is relatively stable today at around 50:1.