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Q. The following table introduces the relationship between wholesale price index and industrial production changes between the years 1929 - 1935. What is the purpose of the given figure? Please note that the numbers could be starting from the origin with 50 and 50 and increase by ten units, each time. The numbers 10, 11, 12 etc. could read 100, 110, 120 etc. The numbers on the Y-axis best be ignored and just note that every dash shows a ten beginning from 50. Answer: The reason is to illustrate those countries that left the gold standard early and adopted counter-deflationary monetary policies such as Australia and the United Kingdom experienced milder declines in output during the Great Depression. Countries such like France and Switzerland that stuck to the gold standard longer had greater decline in price level and output.
How do countries gain under the increasing cost assumptions
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