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Click to edit Master subtitle style  2/23/11 The Disintegration of the First Global Economy INTB 3351
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 2/23/11 Basics: Main currencies fixed in terms of gold. Total value of a nation’s money supply determined by size of its gold reserves. Led and managed by Great Britain. Adopted by United States and other
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 2/23/11 Gold Standard System Operation (price-specie flow mechanism) in Theory: Nation A and B Nation B runs up balance-of-payments surplus  with Nation A Gold stock of B will be enlarged by increase in  reserves, while gold stock of A will be reduced by an equal amount  as a result of decrease in reserves
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 2/23/11 Benefits of the Gold Standard System Stabilized the real values of national currencies. Facilitated transactions between economies: reduced “currency risk,” and thus reduced the risks of engaging in international trade and investment. “Tight” money supply system; eliminated
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 2/23/11 Consequences of the Gold Standard System Tended to create and propagate vicious cycles of boom and bust within national economies. Primary product exporting countries
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This note was uploaded on 02/22/2011 for the course INTB 3351 taught by Professor Priest during the Spring '08 term at University of Houston.

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INTB - INTB3351 ClicktoeditMastersubtitlestyle...

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