If the quantity equation holds, then a country operating under a gold standard will experience inflation:
A) during a gold rush similar to California's gold rush in 1849.
B) when it buys more goods from another country using gold.
C) when the price of gold increases.
D) when people find other non- monetary uses for gold.

Question

Quizplus · Accepted Answer

A gold rush increases the supply of gold, which increases the money supply under a gold standard, leading to inflation.

If the Quantity Equation Holds, Then a Country Operating Under