Problem
Suppose the dollar is put on a bimetal standard. The government defines the dollar as 0.0025 ounces of gold and 0.185 ounces of silver and stands ready to trade paper dollars for either gold or silver. In the market, the price of gold is $393.75 and the price of silver is $5.25/oz. What will arbitragers do? What will happen to government stocks of gold and silver? Which is the bad money?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.