Multiple Choice
Which of the following is not an obstacle to achieving the optimal quantity of a public good?
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8. The Types of Goods
Public Goods: Demand Curve and Optimal Quantity
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Which of the following policies did the People's Party support to fight deflation?
A
Increasing the circulation of silver coins
B
Reducing government spending
C
Adopting a strict gold standard
D
Implementing higher tariffs on imports
Verified step by step guidance1
Understand the context: Deflation is a decrease in the general price level of goods and services, which can increase the real burden of debt and slow economic growth.
Recall the People's Party (Populists) stance: They were primarily farmers and laborers who wanted policies to increase the money supply to combat deflation and debt burdens.
Analyze each policy option in terms of its effect on money supply and deflation:
- Increasing the circulation of silver coins would increase the money supply (bimetallism), which tends to reduce deflation.
- Reducing government spending typically contracts the economy and money supply, potentially worsening deflation.
- Adopting a strict gold standard limits money supply growth, which can worsen deflation.
- Implementing higher tariffs on imports affects trade balance but does not directly increase money supply to fight deflation.
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