Question

“Inflation is not possible under the gold standard.” Is this statement true, false, or uncertain? Explain your answer.

Short answer

The given statement "inflation is not possible under the gold standard" is false.

Step-by-step solution

Concept Introduction

Golden standard refers to the fixed rate of exchange system under which each countries' currency is created convertible into some fixed amount of gold that also fixed the rate between these currencies.

Explanation of Solution

The given statement "inflation is not possible under the gold standard" is false. The gold standard includes the measurement of the assorted currencies on the premise of the gold. And this measurement is fixed as per the supply of gold during a country. The discoveries or increase in gold in a very country would increase the cash supply of that country which might mean decrease within the value of the currency. The decrease within the value of the currency thanks to the rise in gold or finances would end in inflation within the country. So, inflation is feasible under the gold standard. Thus, given statement isn't true.