In the price-specie-flow doctrine, a deficit country will __________ gold, and this gold Flow will ultimately lead to __________ in the deficit country's exports.
A) lose; a decrease
B) lose; an increase
C) gain; a decrease
D) gain; an increase

Question

Quizplus · Accepted Answer

According to the price-specie-flow doctrine, a deficit country will lose gold as they need to pay for more imports than their exports. This loss of gold will lead to an increase in the exchange rate and prices in the deficit country, making its exports cheaper and more attractive to other countries. Thus, ultimately, this gold flow will lead to an increase in the deficit country's exports.

In the Price-Specie-Flow Doctrine, a Deficit Country Will __________ Gold