Which statement is false? (LO3) a) The gold standard will work only when the gold supply increases as quickly as the world's need for money. b) The gold standard will work only if all nations agree to devaluate their currencies simultaneously. c) The gold standard will work only if participating nations are willing to accept periodic inflation. d) The gold standard will work only if participating nations are willing to accept periodic unemployment.

The gold standard is a monetary system in which a country's currency or paper money has a value directly linked to gold. In this system, countries agree to convert paper money into a fixed amount of gold upon request. For the gold standard to work, participating countries need to maintain a fixed exchange rate with gold, and their currency supply needs to be linked to the amount of gold they possess. Now, let's analyze each statement:

The gold standard will work only when the gold supply increases as quickly as the world's need for money. This statement is true. The gold standard's effectiveness is dependent on the stability of the gold supply. If the gold supply increases more slowly than the global demand for money, deflation and lack of liquidity can occur, leading to economic instability and depression.

The gold standard will work only if all nations agree to devaluate their currencies simultaneously. This statement is false. The gold standard does not require all nations to devalue their currencies simultaneously; instead, it requires countries to maintain a fixed exchange rate with gold. When countries devalue their currencies, it generally means that they are moving away from the gold standard, not adhering to it.

The gold standard will work only if participating nations are willing to accept periodic inflation. This statement is true. Inflation is a natural occurrence in any economy, and countries participating in the gold standard must be ready to accept a certain level of inflation. In a gold standard system, inflation can be caused by an increase in the gold supply or the anticipation that a country will devalue its currency.

The gold standard will work only if participating nations are willing to accept periodic unemployment. This statement is also true. Unemployment is a consequence of economic fluctuations, and participating countries in the gold standard must be willing to accept periodic unemployment. Under the gold standard, countries with high unemployment may attempt to depreciate their currency by increasing the domestic money supply. However, this strategy can lead to greater unemployment in other countries tied to the gold standard, as these countries may experience deflation and reduced demand for their products. In conclusion, the false statement is: b) The gold standard will work only if all nations agree to devaluate their currencies simultaneously.