Suppose that at the fixed exchange rate implied by the gold standard, the quantity supplied of Podgland's currency exceeded the quantity demanded. This implies that

Question

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If the quantity supplied of Podgland's currency exceeds the quantity demanded at the fixed exchange rate, it means that there is an excess supply of the currency. This will lead to a depreciation in the value of Podgland's currency, causing its export prices to become more competitive, which will increase demand for its exports and decrease demand for imports. As a result, Podgland's balance of payments will move towards a deficit as it exports more and imports less.

Suppose That at the Fixed Exchange Rate Implied by the Gold