If the US Were to Revert to a Gold Standard, Trade Deficits

question 67

Multiple Choice

If the U.S. were to revert to a gold standard, trade deficits would:

• A) result in gold reserves in the U.S. decreasing.
• B) result in lower domestic interest rates.
• C) quickly disappear.
• D) result in high inflation.

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Definitions:

Good W

A hypothetical product or service used in economic examples or theories to discuss various economic principles.

Good Y

Typically used in economic models, it represents a generic secondary good in contrast to another good, often labeled as Good X.

Rationing Device

A mechanism used to distribute scarce goods and services among competing uses or users.

Supply Shifts

Changes in the supply curve caused by factors other than the product's price, such as production costs, technology, and expectations, leading to more or less of the product being supplied at each price.