Question

Some economic historians have noted that during the period of the gold standard, gold discoveries were most likely to occur after a long deflation.

Which of the following explanations is the most likely reason for this?

The government knew where all the gold deposits were. When deflation went on for too long, it would tip off prospectors to help alleviate the deflation.

After a long period of deflation, an ounce of gold was worth a lot less in terms of goods and services. This created a greater incentive to look for new gold deposits.

After a long period of deflation, an ounce of gold would buy more goods and services. This created a greater incentive to look for new gold deposits.

After a long period of deflation, the government would charter prospectors to find gold deposits to help alleviate the deflation.

Answer 1