Sample Term Paper

Before attempting to define the Gold Standard, it would be probably more important to look at the circumstances and conditions that led to an enhanced this kind of monetary system. As trade became clear for nations, within and outside national economies, there was need for a standard monetary system to govern exchange. The gold standard is one of these systems, in which gold was used as a backing for money in circulation. In the gold standard system, money that is printed reflects the gold reserve of the country’s central bank. Of course, there could be other backing like silver, but gold was adopted for the superior characteristics it has over the others (Flandreau & Eichengreen 80).

A country or an economy would be said to exhibit a full gold standard system if the currency it has in circulation can be backed completely by gold reserve. The system suffered greatly during and after political instabilities like the world wars (Einaudi 72). Though gold standard monetary system may be a good system for international trade and monetary exchange, the system cannot help during recession or depression since the monetary policies required to stabilize the economy in such conditions cannot work (Burdon 98).

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