Question: a. What do you mean by Gold Standard and how the exchange rate is determined under this system? b. Differentiate between gold export point

a. What do you mean by Gold Standard and how the exchange rate is determined under this system? b. Differentiate between gold export point and gold import point with appropriate example. C. Critically evaluate the role of Quantity Theory of Money in the adjustment of BOP deficit in the light of the price-specie-flow mechanism.

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Gold Standard and Exchange Rate determination The Gold Standard is a monetary system where a countrys currency is directly linked to gold Under this system the exchange rate is determined by the fixed price at which the currency can be exchanged for a specific amount of gold For example if the fixed exchange rate is 1 for 05 grams of gold then the exchange rate is determined by the value of gold in terms of the currency Gold Export Point and Gold Import Point The gold export point is the price at which it becomes profitable for a country ... View full answer

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