Prior to the 1870s, both gold and silver were used as international means of payment, and the exchange rates among currencies were determined by either their gold or silver contents. Suppose that the dollar was pegged to gold at $20 per ounce, the French franc is pegged to gold at 40 francs per ounce and to silver at 8 francs per ounce of silver, and the German mark is pegged to silver at 2 marks per ounce of silver. 

What would the exchange rate between the US. dollar and German mark be under this system?

Answer rating: 100% (QA)

Under the gold and silver standard the relative amounts of gold or silver in two currencies were us... View the full answer