Philippine Money Quiz: History of Currency & Monetary Standards

12 Questions

What are the two main classifications of monetary standards?

Commodity standard and metallic standard

What is a monetary standard?

A set of rules governing the supply of money in an economy

What is a commodity standard?

A monetary system where the value of the currency is tied to a specific commodity or set of commodities

What are the two types of commodity standards mentioned in the text?

Gold standard and silver standard

What are the three types of gold standards mentioned in the text?

Gold coin standard, gold bullion standard, and gold exchange standard

Which statement accurately describes the gold coin standard?

The government defines the monetary unit as a specific weight and fineness of gold.

What are the three types of silver standards mentioned in the text?

Silver coin standard, silver bullion standard, and silver exchange standard

What is the key difference between the gold coin standard and the gold bullion standard?

The gold coin standard defines the monetary unit in terms of gold coins, while the gold bullion standard defines it in terms of gold bars.

What is the primary advantage of the gold bullion standard over the gold coin standard?

It stretches existing supplies of gold to support the international monetary system.

Which statement accurately describes a characteristic of the gold bullion standard?

The monetary authority is not obligated to buy and sell gold at a fixed price.

Which economist first suggested the idea of the gold bullion standard?

David Ricardo

What was the official United States price of gold per ounce when it was on the gold bullion standard from the 1930s until 1971?

$35 per ounce

Study Notes

Monetary Standard in the Philippines

A country's monetary standard refers to the rules and institutions governing the supply of money in its economy.
The standard indirectly affects prices and can influence the rate of growth of real economic output, depending on expectations.

Classifications of Monetary Standard

Commodity Standard: A monetary system where the purchasing power or value of the monetary unit is equal to the value of a designated quantity of a particular commodity or set of commodities.

Monometallic Standard

Gold Standard: A monetary system where the value of the monetary unit is equal to the value of a designated quantity of gold.
- Gold Coin Standard: A country allows the conversion of gold bullions into coins, which are freely obtained by citizens in exchange for other forms of money.
  - Characteristics:
    - Monetary unit is stated in a definite weight and fineness of gold.
    - People are free to convert their bullions into coins.
    - Gold can be used in any manner.
    - Gold can be freely imported and exported.
    - All other kinds of money and bills are exchangeable to gold coins.
    - Money supply is determined by the amount of gold reserves.
    - Free coinage of gold, where citizens can convert gold bullions into coins.
    - Free market of gold, where people are free to import and export gold.
- Gold Bullion Standard: A country holds reserves of gold in the form of bars rather than coins, removing gold from monetary circulation.
  - Characteristics:
    - Monetary unit is defined in terms of certain weight and fineness of gold.
    - All gold coins are held as standard coins and considered unlimited legal tender.
    - All other types of money are freely convertible into gold or equivalent of gold.
    - Unlimited coinage of gold at no cost.
    - Free and unlimited melting of gold.
    - Import and export of gold is freely allowed.
    - Monetary authority is under permanent obligation to buy and sell gold at the fixed price without limit.

History of Philippine Currency & Monetary Standards