TOLFA Segment 11, Question 3

Suppose a free-market society chose gold for its predominant form of money, and that the supply of gold being mined increases by 2% a year. After a little while, what will happen to average prices if the supply of goods and services increases by 5% a year? They will rise, by about 7% a year
They will fall, by about 7% a year
They will rise, by about 3% a year
They will fall, by about 3% a year

Don't hurry away; even when you've got the right answer, try clicking on the others to see why they are wrong! Then when you have correctly answered this make notes in your student notebook, go to Question 4.

Segment 11 Page