# 205.6 Lesson - goldBacked

**Screen:** goldBacked

**Headline:** From Gold to Gold-Backed

**Reward:** 3

**Text:** In the past, some governments linked the value of their currency to a specific amount of gold, a system known as a "gold standard." This meant that the government had to hold a certain amount of gold in reserve in order to issue a certain amount of currency.

This system limited the government's ability to borrow money because they could not simply print more currency to cover the cost of borrowing. Governments often borrowed money to finance wars or other expensive projects, but the gold standard made it difficult for them to do so without first accumulating enough gold to back the new currency they wanted to issue.

The gold standard was also problematic for citizens because it did not provide any guarantee that their deposits in the bank would be safe, as the value of their money was dependent on the government's ability to maintain its gold reserves.

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## QUIZ

**Question:** What was the main problem with the gold standard system for governments and citizens?

**Answer:** It made it difficult for governments to borrow money

**Feedback:** Yep! The gold standard made it difficult for governments to borrow money because they had to hold a certain amount of gold in reserve in order to issue a certain amount of currency

**Correct:** true

**Answer:** It made it hard for people to save money in the bank

**Feedback:** I'm sorry, but the gold standard did not make it hard for people to save money in the bank. It was actually a problem for citizens because it did not provide any guarantee that their deposits in the bank would be safe, as the value of their money was dependent on the government's ability to maintain its gold reserves

**Correct:** false

**Answer:** It required governments to hold a petting zoo in their treasury

**Feedback:** An amusing idea, but nonsense nevertheless! Try again.

**Correct:** false

<figure><img src="/files/ukvflEeDwKVKSyUzKHZV" alt=""><figcaption></figcaption></figure>


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