Question

Since both SDRs and the U.S. dollar have lost their utility as the basic medium of financial exchange, most monetary statistics relate to gold rather than dollars.

A) True
B) False
C) Partially true
D) Not addressed in the passage

Answer 1

The notion that monetary statistics primarily relate to gold rather than the U.S. dollar is false, as current financial systems rely on market-determined currency values, not gold standard.

Step-by-step explanation:

The statement that most monetary statistics relate to gold rather than dollars, due to the loss of utility of Special Drawing Rights (SDRs) and the U.S. dollar as the basic medium of financial exchange, is false.

Based on the provided information, it is evident that the U.S. dollar remains a key currency in international finance, and SDRs are used by the International Monetary Fund (IMF) and other institutions as a supplementary international reserve asset.

Gold does have a historic role as a commodity money, but currently, the value of national currencies is determined by financial markets through supply and demand.

Additionally, we can see that the roles of various factors such as domestic interest rates and the supply and demand of a currency are crucial to the value of a nation's currency. The gold standard, which used to back currencies until 1971, has been replaced by these market forces, underlining the false nature of the question's premise.