Question #52

The crucial difference between a monetary system based on the gold standard world and a fiat currency monetary is

• that under the former system, excessive national government spending led to inflation.
• that under the former system, the national government had to issue debt to cover spending above taxation.
• that under the former system, the national government could not use net spending to achieve full employment.

Answer #519

Answer: that under the former system, the national government had to issue debt to cover spending above taxation.

Explanation

Please read Gold standard and fixed exchange rates - myths that still prevail or post a comment for further discussion.