Author Question: Suppose an economy's exchange rate system is the gold standard and vast tracks of gold are ... (Read 146 times)

karateprodigy · **on:** Jun 29, 2018

Suppose an economy's exchange rate system is the gold standard and vast tracks of gold are discovered, as is what happened in the United States in 1849. If the economy is at full employment, what should this discovery do?

A) It should lower the money supply and cause deflation.
B) It should raise the money supply and cause inflation.
C) It should raise the money supply and cause disinflation.
D) It should raise the money supply but have no impact on the price level.
E) it should not change the money supply.

Question 2

Refer to Figure 3-7. Assume that the graphs in this figure represent the demand and supply curves for laptop computers. Which panel best describes what happens in this market when the price of computer hard drives falls?

A) Panel (a) B) Panel (b) C) Panel (c) D) Panel (d)