Inflation occurs when:Question 9Select one:a.The stock of goods and services increases and the quantity of money in circulation decreases.b.The quantity of money in circulation rises faster than the stock of goods and services.c.Output increases faster than the money supply.d.The money supply decreases and the output increases.
Question
Inflation occurs when:Question 9Select one:a.The stock of goods and services increases and the quantity of money in circulation decreases.b.The quantity of money in circulation rises faster than the stock of goods and services.c.Output increases faster than the money supply.d.The money supply decreases and the output increases.
Solution
Inflation occurs when:
b. The quantity of money in circulation rises faster than the stock of goods and services.
This is because when there is more money circulating in the economy than there are goods and services available, the prices of these goods and services tend to rise. This is due to the basic economic principle of supply and demand: when demand (in this case, money) exceeds supply (goods and services), prices increase. This overall increase in prices is what we refer to as inflation.
Similar Questions
_____ inflation is inflation that occurs when the demand for goods and services is greater than the supply.Question 6Answera.Supply-sideb.Demand-pullc.Demand-pushd.Cost-pushe.Demand-side
According to the quantity equation of money, in the long run, an increase in the growth of the money supply willResponsesA increase inflation by the same amount if velocity is constant.increase inflation by the same amount if velocity is constant.B increase inflation by the smaller amount if velocity increases.increase inflation by the smaller amount if velocity increases.C increase inflation by the larger amount if velocity decreases.increase inflation by the larger amount if velocity decreases.D have no effect on inflation if velocity is constant.
Inflation affects an economy by:A.limiting international trade opportunities.B.making prices rise over time.C.reducing the size of the labor market.D.increasing the value of currency.
What happens to a country when it undergoes inflation?A.Trade with other countries mostly stops.B.Goods increase in price year after year.C.Companies begin hiring many more employees.D.Governments regulate businesses more strictly.
inflation: types and causes IN DETAIL
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