Analyze the gold exchange system
Gold exchange system allowed countries to convert money into
fixed amount of Gold. Here the paper currency is directly linked to
value of gold. The gold exchange system was implemented to curb the
ill effects of inflation and deflation. In this system ther is
fixed price of gold and they can be exchanged for paper
currency.
The gold exchange system has been completely abolished by many
countries. However it is used to settle transaction in certain
cases.
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