Under a gold standard, a major discovery of a new gold deposit would:
A)decrease the volume of world trade.
B)increase the inflation rate.
C)decrease output growth.
D)increase private demand for gold.

Question

Quizplus · Accepted Answer

Under a gold standard, the money supply is linked to the amount of gold a country possesses. A major discovery of new gold deposits would increase the money supply, leading to more money chasing the same amount of goods and services, which typically results in an increase in the inflation rate.

Under a Gold Standard, a Major Discovery of a New