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Why favour gold standard as a basis of currency?

      

Why favour gold standard as a basis of currency?

  

Answers


Wilfred
1. It is not subject to changing policies of the government or currency authority.

2. The country can be able to maintain the purchasing power of its currency for a long period.

3. It preserves and maintains the external value of the currency within narrow limits. As a matter of fact the gold standard system provides fixed exchange which is a boom to trader and investors.

4. It establishes an international measure of value hence giving the advantage of a common international currency.

5. Its further claimed that gold standard help to adjust the balance of payment between countries automatically. This is done through the use of price specie mechanism.
Wilfykil answered the question on March 8, 2019 at 08:22


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