A Problem with the Operation of the Gold Standard in the World

question 126

Multiple Choice

A problem with the operation of the gold standard in the world economy was that

• A) it involved too much government intervention in the economy.
• B) the world economy was subject to too much inflation.
• C) a country did not have control of its domestic monetary policy.
• D) it caused the Great Depression.

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Definitions:

Callable Bond

A callable bond is a financial instrument that allows the issuer to pay off the bond prior to its due date.

Call Provision

A clause in a bond or other fixed-income security that allows the issuer to repurchase and retire the debt before its maturity date.

Coupon Rate

The interest rate stated on a bond, which is the percentage of the bond's face value that is paid out annually as interest to the bondholder.

Yield to Maturity

The total return anticipated on a bond if held until it matures, including all coupon payments and the return of the principal amount.