In the modern world, central banks are free to increase or reducethe money supply as
Chapter 6, Problem 12(choose chapter or problem)
In the modern world, central banks are free to increase or reducethe money supply as they see fit. However, some peopleharken back to the good old days of the gold standard.Under the gold standard, the money supply could expand onlywhen the amount of available gold increased.a. Under the gold standard, if the velocity of money was stablewhen the economy was expanding, what would have had tohappen to keep prices stable?b.Why would modern macroeconomists consider the goldstandard a bad idea?
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