--%>

Advantages and disadvantages of gold standard

Write the advantages and disadvantages of the gold standard.

E

Expert

Verified

Advantages of the gold standard involves: 

a) As supply of gold is controlled, countries do not have high inflation; 

b) Any of BOP disequilibrium may be corrected through the cross-border flows of the gold.

While, the major disadvantages of gold standard are as: 

a) The world economy may be subjected to the deflationary pressure due to restricted gold supply; 

b) The standard of gold itself does not have any mechanism for enforcing rules of game, and, consequently, countries can pursue economic policies which are incompatible with standard of gold.

   Related Questions in Financial Accounting

  • Q : Historical Cost of Fixed Assets What

    What are the Historical Cost of Fixed Assets?

  • Q : Conversion and competitive effects of

    Discuss the conversion and competitive effects of exchange rate changes on the firm’s operating cash flow.

  • Q : Real gross profit ratio and standard

    Is real gross profit ratio is bigger than standard gross profit ratio?

  • Q : Essay-People Dependent on technology

    PEOPLE DEPENDENT ON TECHNOLOGY TOO MUCH: Science has developed tremendously in past few years and with the development of science many technologies have entered this world. Today everything is being done with the h

  • Q : Help Otobai Motor Company is currently

    Otobai Motor Company is currently paying a dividend of $1.40 per year. The dividends are expected to grow at a rate of 18% for the next three years and then a constant rate of 5% thereafter forever. What is the value of its current stock price? Assuming that the discount rate is 10%.

  • Q : What are Bad Debts What are Bad Debts

    What are Bad Debts and what are their influence on the value of debtor?

  • Q : Progressives The progressives were

    The progressives were fascinated in “making people better.” What types of things were they fascinated in changing and who were they aiming their changes at?

  • Q : What is Bank errors What is Bank errors

    What is Bank errors. Briefly define it with respect to Accountancy?

  • Q : Write a Matlab function Fourbar Write a

    Write a Matlab function Fourbar (r1,r2,r3,r4,theta,speed) that animates three cycles of a fourbar linkage having link lengths r1, r2, r3, r4. The function first checks to ensure the mechanism isGrashof (including the change-point c

  • Q : Increase the return without any

    Suppose that treasurer of IBM has an extra cash reserve of $1,000,000 to invest for the six months. Six-month interest rate is 8% per annum in U.S. and 6% per annum in the Germany. Presently, spot exchange rate is DM1.60 per dollar and six-month forward exchange rate