Consider Two Countries, Mondrain and Davenport That Are on the Gold

question 162

Multiple Choice

Consider two countries, Mondrain and Davenport that are on the gold standard exchange
Rate system. The exchange rate implied by the gold standard is 5 divas (Davenport's
Currency) per mond (Mondrain's currency) . Suppose at this exchange rate, the quantity supplied of monds exceeds the quantity demanded. Which of the following is true?

• A) Spending flowing out of Mondrain exceeded spending flowing into Mondrain.
• B) Spending flowing into Mondrain exceeded spending flowing out of Mondrain.
• C) Mondrain's exports to Davenport exceeded its imports from Davenport.
• D) Residents of Davenport acquired more assets in Mondrain than residents of Mondrain purchased in Davenport.

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