Econia Is on the Gold Standard for Its Currency, Which

question 41

Multiple Choice

Econia is on the gold standard for its currency, which is called the econar. If a new deposit of gold is discovered in Econia, what is likely to happen to the purchasing power of the econar?

• A) More gold will lead to deflation and decrease the purchasing power of the econar.
• B) More gold will trigger inflation, which will increase the purchasing power of the econar.
• C) More gold will lead to deflation and increase the purchasing power of the econar.
• D) More gold will lead to inflation and decrease the purchasing power of the econar.

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