made into a movie in 1939, Dorothy’s slippers were changed from silver to ruby.Apparently, the Hollywood filmmakers were not aware that they were telling astory about nineteenth-century monetary policy.)Although the populists lost the debate over the free coinage of silver, theydid eventually get the monetary expansion and inflation that they wanted. In1898 prospectors discovered gold near the Klondike River in the CanadianYukon. Increased supplies of gold also arrived from the mines of South Africa.As a result, the money supply and the price level started to rise in the UnitedStates and other countries operating on the gold standard. Within 15 years,prices in the United States were back to the levels that had prevailed in the1880s, and farmers were better able to handle their debts.QUICK QUIZ:List and describe six costs of inflation.CONCLUSIONThis chapter discussed the causes and costs of inflation. The primary cause of in-flation is simply growth in the quantity of money. When the central bank creates
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