Under the Gold Standard of Currency Exchange That Existed from 1879

question 44

Multiple Choice

Under the gold standard of currency exchange that existed from 1879 to 1914, an ounce of gold cost $20.67 in U.S. dollars and £4.2474 in British pounds. Therefore, the exchange rate of pounds per dollar under this fixed exchange regime was:

• A) £4.8665/$.
• B) £0.2055/$.
• C) always changing because the price of gold was always changing.
• D) unknown because there is not enough information to answer this question.

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Definitions:

Total Cost

The combined total of all costs needed for the production of goods or services, incorporating both stable and changeable expenses.

Price Elasticity Of Demand

A measure of how much the quantity demanded of a good responds to a change in its price, with high elasticity indicating a significant response to price changes.

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