2.4Supply of MarksXDemand for Marks6810QUANTITY OF MARKS (Millions)PRICE OF A MARK (In Dollars)2.11.81.51.20.90.60.3024121416Demand for MarkstoSupply of MarksThe ImbalanceA recession in the United States leads to a reduction in imports from Germanymillion marksin the balance-of-payments.?the demand for German marks and leading to aUnder the gold standard, the fixed exchange rate is maintained in the face of the balance-of-payments imbalance shown on the preceding graphbecause gold must flow from 7. Gold standardBetween 1879 and 1934, the world's major nations adhered to the gold standard. Under the gold standard, a country maintained a fixed relationshipbetween its stock of gold and its money supply. Suppose that Germany defined a German mark as 120 grains of gold, and the United States defined$1 as 100 grains of gold.Under the gold standard, a German mark would have been worth U.S. dollars.Suppose the fixed exchange rate is $1.20 per mark. Suppose that a recession in the United States leads to a reduction in imports from Germany.On the following graph, shift the relevant curve or curves to illustrate the described changes. Then use the black points (plus symbol) to indicate theimbalance.

The balance of payments (BoP) is a comprehensive accounting system that records all economic…

A recession in the United States leads to a reduction in imports from Germany in the balance-of-payments. million marks the demand for German marks and leading to a Under the gold standard, the fixed exchange rate is maintained in the face of the balance-of-payments imbalance shown on the preceding graph because gold must flow from to