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IN THE 1850S THE FRENCH FRANC WAS VALUED BY BOTH GOLD AND SILVER, UNDER THE OFFICIAL...

IN THE 1850S THE FRENCH FRANC WAS VALUED BY BOTH GOLD AND SILVER, UNDER THE OFFICIAL FRENCH RATIO WHICH EQUATED A GOLD FRANC TO A SILVER FRANC 15½ TIMES AS HEAVY. AT THE SAME TIME, THE GOLD FROM NEWLY DISCOVERED MINES IN CALIFORNIA POURED INTO THE MARKET, DEPRESSING THE VALUE OF GOLD. DISCUSS WHAT WOULD HAPPEN TO THE FRANC IN THIS CASE.

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Answer: This means franc effectively became a gold currency and would start trading it in more instead of Silver.

As the Gold volume increased in the market there will be enough sufficient amount available to trade.

Conversion from Gold to Silver was decided by french which could be biased in nature and as more gold is available, people trading, would like to remove this ambiguity of conversion and would directly like to have one to one conversion, which would be same if Gold is the only thing for trading.

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