Suppose That Country a and Country B Are Both on a Bimetallic

question 77

Multiple Choice

Suppose that country A and country B are both on a bimetallic standard.In country A the ratio is 15 to one (i.e.,an ounce of gold is worth 15 times as much as an ounce of silver in that currency) ,while in country B the ratio is ten to one.If the free flow of capital is allowed between countries A and B,is this a sustainable framework?

• A)Yes
• B)No
• C)There is not enough information to make an informed determination.

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Definitions:

Money Market Instruments

Financial instruments that provide liquidity and short-term financing in the money market, such as treasury bills, commercial paper, and certificates of deposit.

High-risk Securities

Financial instruments that offer a high potential return but also present a higher likelihood of loss.

Quick Resell

The act of selling an item or property soon after its purchase, typically to capitalize on market conditions or make a quick profit.

General Obligation Bond

A type of municipal bond backed by the credit and taxing power of the issuing jurisdiction rather than the revenue from a given project.