Under a gold standard,a country with a trade deficit should expect

Question

Quizplus · Accepted Answer

Under a gold standard, a country with a trade deficit experiences an outflow of gold as payments for imports exceed receipts from exports. As gold is a scarce resource, the reduction in a country's gold reserves leads to a contraction of its money supply and, ultimately, a decrease in the value of its currency relative to other currencies. Therefore, gold flows out of the country to other nations, making choice A the correct answer.

Under a Gold Standard,a Country with a Trade Deficit Should