If we observe that the price of gold is rising and the quantity of gold traded in the market is falling, then this must be the result of an increase in the supply of gold.

Question

Quizplus · Accepted Answer

The observed scenario of rising prices and falling quantity traded is more indicative of a decrease in supply or an increase in demand, not an increase in supply. An increase in supply, all else being equal, would typically lead to lower prices and a higher quantity traded.

If We Observe That the Price of Gold Is Rising