Suppose that the United States is on a bimetallic standard at $30 to one ounce of gold and $2 for one ounce of silver. If new silver mines open and flood the market with silver,

Question

Quizplus · Accepted Answer

If new silver mines flood the market, the value of silver will decrease relative to gold. As a result, people will prefer to use silver currency since it has a lower relative value. Eventually, the gold currency will be hoarded or exported until only the silver currency remains in circulation.

Suppose That the United States Is on a Bimetallic Standard