2007-03-17 00:46:50 · 2 answers · asked by Divya R 1 in Business & Finance ➔ Other - Business & Finance
Yes, backed by gold = the gold standard. It would indicate that a set relationship between the value of currency and the value of gold exists, and in (ideal condition) theory the governemtnt holds enough gold to exchange all currency in circulation for gold.
The US used to be on a gold standard...
2007-03-17 00:53:02 · answer #1 · answered by Anonymous · 0⤊ 0⤋
If it's backed by gold then it's worth the value of the bill in gold. That is the gold standard.
The US dollar was backed by gold sometime ago. Then they went to the silver standard, and now we are on the credit standard. The US government promises to pay the bearer one dollar on demand. Dollar of what????
So the value of the dollar is worth only what people believe it to be worth. In reality, it is only worth the paper it is written on. But that is its intrinsic value, the real value is what we think its worth. The value is not tied to any standard.
2007-03-17 01:02:38 · answer #2 · answered by Fordman 7 · 0⤊ 0⤋