Under an international gold standard, a flow of gold from country A into country B would be halted by

Question

Quizplus · Accepted Answer

C) Rising prices and incomes in B and falling prices and incomes in A would naturally halt the flow of gold from country A to country B. This is because the increase in prices and incomes in B would make B's goods more expensive to A, reducing A's imports from B. Conversely, the fall in prices and incomes in A would make A's goods cheaper to B, increasing B's imports from A. This change in trade balance would reduce the need for gold to flow from A to B to settle accounts.

Under an International Gold Standard, a Flow of Gold from Country