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A gold standard means that the money supply would be determined by the gold supply and hence monetary policy could no longer be used to stabilize the economy. [114] Although the gold standard brings long-run price stability, it is historically associated with high short-run price volatility.
The Nixon shock was the effect of a series of economic measures, including wage and price freezes, surcharges on imports, and the unilateral cancellation of the direct international convertibility of the United States dollar to gold, taken by United States president Richard Nixon on 15 August 1971 in response to increasing inflation.
The early unit was a grain of wheat or barleycorn used to weigh the precious metals silver and gold. Larger units preserved in stone standards were developed that were used as both units of mass and of monetary currency. The pound was derived from the mina (unit) used by ancient civilizations.
The gold standard maintained fixed exchange rates that were seen as desirable because they reduced the risk when trading with other countries. Imbalances in international trade were theoretically rectified automatically by the gold standard. A country with a deficit would have depleted gold reserves and would thus have to reduce its money supply.
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The Gold Clause Cases were a series of actions brought before the Supreme Court of the United States, in which the court narrowly upheld the Roosevelt administration's adjustment of the gold standard in response to the Great Depression.
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Executive Order 6102 is an executive order signed on April 5, 1933, by US President Franklin D. Roosevelt "forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States."