Question

When the United States was on the gold standard, banks were required to:

A. exchange U.S. dollars for a specific amount of gold.
B. provide a certain amount of gold to the government each year.
C. use gold when conducting business with foreign clients.
D. only accept gold as collateral for large business loans.

Answer 1

A. exchange U.S. dollars for a specific amount of gold.

Step-by-step explanation:

In the US, the central bank was required by the Federal Reserve Act (1913) to have gold backing 40% of its demand notes. Higher interest rates intensified the deflationary pressure on the dollar and reduced investment in U.S. banks.