Summary

This video talks about a disadvantage of the Gold Standard. Specifically we discuss how economic shocks in one country can be transmitted quickly across the world because of the fixed exchange rate mechanism that is synonymous with the gold standard. We look at what is likely to happen if there was a terrorist attack in one country on the Gold Standard, and see that its entirely possible that a country would have to increase interest rates in reaction to such an event.

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What restrictions did the Gold Standard impose on member countries?