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Why don't economists agree with backing paper money with a certain commodity, such as gold? Supplies of commodities like gold can change ( expectedly, unexpectedly ). A sudden increase in the availability of a commodity could ( increase, decrease) the money supply too quickly and trigger inflation. If the government backed the currency with gold, then the money supply ( would, would not ) vary with the availability of gold. A persistent scarcity of a commodity could (increase , reduce ) the money supply too much and cause a recession and unemployment.

Why don't economists agree with backing paper money with a certain commodity, such as gold? Supplies of commodities like gold can change ( expectedly, unexpectedly ). A sudden increase in the availability of a commodity could ( increase, decrease) the money supply too quickly and trigger inflation. If the government backed the currency with gold, then the money supply ( would, would not ) vary with the availability of gold. A persistent scarcity of a commodity could (increase , reduce ) the money supply too much and cause a recession and unemployment.

MACROECONOMICS FOR TODAY
MACROECONOMICS FOR TODAY
10th Edition
ISBN:9781337613057
Author:Tucker
Publisher:Tucker
Chapter16: Monetary Policy
Section: Chapter Questions
Problem 15SQ
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Why don't economists agree with backing paper money with a certain commodity, such as gold? Supplies of commodities like gold can change (expectedly, unexpectedly ). A sudden increase in the availability of a commodity could (increase, decrease) the money supply too quickly and trigger inflation. If the government backed the currency with gold, then the money supply ( would, would not ) vary with the availability of gold. A persistent scarcity of a commodity could (increase , reduce ) the money supply too much and cause a recession and unemployment.
Transcribed Image Text:Why don't economists agree with backing paper money with a certain commodity, such as gold? Supplies of commodities like gold can change (expectedly, unexpectedly ). A sudden increase in the availability of a commodity could (increase, decrease) the money supply too quickly and trigger inflation. If the government backed the currency with gold, then the money supply ( would, would not ) vary with the availability of gold. A persistent scarcity of a commodity could (increase , reduce ) the money supply too much and cause a recession and unemployment.
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