Suppose the U.S. dollar is defined by law as being equal to 0.1 ounce of gold. Further suppose the British pound is defined as being equal to 0.05 ounce of gold. The implied exchange rate between the pound and the dollar is
A. A fixed rate at which $1 = 2 pounds.
B. A flexible rate at which $2 = 1 pound.
C. A fixed rate at which $2 = 1 pound.
D. A flexible rate at which $1 = 2 pounds.
Answer: A
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