00:01
Hi, so the economy of mainland uses gold as money.
00:04
If the government increases, discovers a large reserve of gold on their land.
00:08
Okay, so here is like the scenario, like in between here.
00:14
All right, this place uses gold as money.
00:17
The supply of gold goes up.
00:19
That's what this part is saying.
00:21
So if the supply goes up, the prices for things goes up.
00:25
All right, because like, for example, like let's say we're talking about a can of coke.
00:31
In the original, before the discovery, let's say like one g would cost for a can of coke.
00:39
Now, if there's more gold, that means gold would be worth less.
00:45
And so the price of something like this would actually increase me.
00:49
It goes up to two pieces of gold.
00:51
So if the supply of the money goes up, the prices go up.
00:57
So a says demand for money increases.
01:01
The value of money rises, prices rise.
01:03
All right, so the demand for money decreases because if you actually have more money to use, the demand decreases.
01:12
So that's wrong.
01:14
The answer is b because the supply of money increases, the value of money falls...
