ADVANTAGES AND DISADVANTAGES OF GOLD STANDARD

• occurring when a government prints too much money. If a nation begins to flood the economy with additional money, each unit of its currency purchases less and less. Eventually the coin is worthless.
• Under the gold standard, the government can only print as much money as the gold it has in its vaults. The currency always has value because it is backed by gold.

2 International Trade

• One advantage of the gold standard is that it stabilizes international trade. Different currencies have different values ​​in relation to one another. These exchange rates can fluctuate wildly depending on economic conditions.
• Nations with stable currencies are reluctant to accept less stable currencies for fear of being devalued. The gold standard places all nations on the same level. If all the currencies are backed by gold, all trading partners know that they can redeem the gold instead of the coins. There is no fear of devaluation.