Certovia and Norkland are two neighboring countries that actively trad

QUESTION

Certovia and Norkland are two neighboring countries that actively trade goods and services with each other. Under the gold standard, there will be a net flow of gold from Norkland to Certovia when:

A. Certovia is in trade deficit with Norkland.

B. Norkland is in balance-of-trade equilibrium with Certovia.

C. Certovia is in trade surplus with Norkland.

D. Certovia imports more than it exports to Norkland.

E. Norkland’s balance of payment to Certovia is favorable.

ANSWER

C