Under a gold standard,if the market price of gold is below the official price of gold (set by the monetary authority),people will be more likely to sell gold __________________,which will cause the money supply to _______________ and the price level.to _______________.
A) to the monetary authority; fall; fall
B) to the monetary authority; rise; rise
C) in the gold market; fall; fall
D) in the gold market; rise; rise

Question

Quizplus · Accepted Answer

When the market price of gold is below the official price, people are incentivized to sell gold to the monetary authority because they can get more money than selling it in the market. This increases the money supply as the monetary authority pays out more money for the gold, which, in turn, can lead to inflation, causing the price level to rise.

Under a Gold Standard,if the Market Price of Gold Is