Question

Under the classic gold standard, if prices began rising in the U.S.a.the dollar value of the pound would riseb.the dollar value of the pound would fallc.the U.S. would begin running a balance of trade surplusd.gold would flow out of the U.S. and the U.S. money supply would drop

Answer 1

Answer:

The correct answer is letter "D": gold would flow out of the U.S. and the U.S. money supply would drop.

Explanation:

The classic gold standard is an economic approach in which a nation's currency is gold. Under this approach, the money supply is kept constant and there are a few chances for inflation to arise. Hyperinflation is unlikely to exist. Under this scenario, countries producing gold would be more favored than those that do not.

In the example, in front of a rise in prices, gold would be exported from the U.S. but the countries money supply will decrease.