Explain the Gold Standard

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The Answer is The gold standard was one of the oldest exchange rate systems used for currencies around the world. Put simply, each government using the gold standard stated the value of its currency in terms of gold weight. Most countries used the gold standard by 1880 because it gave local merchants and households confidence in the value of the government-issued currency. By maintaining a fixed price of their currencies in terms of gold, these countries ensured fixed exchange rates among all participants in the gold standard. World War I brought an end to the gold standard because governments accumulated debt and increased taxes, and there simply was not enough gold to fully back up all of the currency being created by governments to settle their debts.

Explain the Gold Standard

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