If the Quantity Equation Holds, Then a Country Operating Under

question 179

Multiple Choice

If the quantity equation holds, then a country operating under a gold standard will experience inflation:

• A) during a gold rush similar to California's gold rush in 1849.
• B) when it buys more goods from another country using gold.
• C) when the price of gold increases.
• D) when people find other non- monetary uses for gold.

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Definitions:

Low-Wage Nations

Countries where the general level of wages is significantly lower than in developed nations.

Productive

The ability to generate a significant amount of output (goods or services) per unit of input (labor, capital, etc.).

Merchandise Balance of Trade

The difference in value between a country's merchandise exports and merchandise imports over a certain period.

Negative

In an economic context, this term often implies a deficit or a diminishing amount in financial accounts or outcomes.