Under the gold standard, to increase the money supply in the country, the government must

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Under the gold standard, the value of a country's currency is directly tied to its gold reserves. To increase the money supply, the government must have enough gold to back up the increase in currency. This is because each unit of currency is convertible into a fixed amount of gold at a specific rate. Thus, if a government wants to issue more currency, it must have an equivalent amount of gold to cover it. Printing more currency without sufficient gold would lead to a decline in the value of the currency and inflation. Similarly, selling gold reserves would reduce the country's backing for its currency, leading to a decline in its value. Buying foreign currencies does not necessarily increase the domestic money supply, as it depends on how the resulting increase in foreign reserves is utilized. Increasing the value of the currency on foreign exchange markets is not the purpose of increasing the money supply but rather a potential effect.

Under the Gold Standard, to Increase the Money Supply in the Country