The Drop in the Buying Power of an Ounce of Gold

question 78

Multiple Choice

The drop in the buying power of an ounce of gold in sixteenth-century Europe was due to

• A) gold being imported from the New World.
• B) silver becoming more popular than gold as a medium of exchange.
• C) hoarding of gold by the French government.
• D) a decline in the purity of the gold being circulated.
• E) laws banning the use of gold in commercial transactions.

---

Definitions:

Net Investment

Net investment refers to the total amount spent on purchasing new capital minus the depreciation on existing capital, indicating the growth of a company or economy's productive capacity.

Capital Goods

Long-lasting goods acquired and used by businesses to produce other goods and services, contributing to their operational capabilities.

Gross Investment

The total amount spent on purchasing or constructing new capital assets before accounting for depreciation.

Net Investment

The portion of total investments in physical assets (like buildings, machinery, and inventory) that remain after accounting for depreciation.