Question

Which of the following causes inflation?
A.Increase in supply of goods
B.Decrease in demand of goods
C.Decrease in money supply
D.Increase in money supply

Answer 1

it's answer d causes inflation because people have more money in their hand and thus they can spend more which increase demand and price of the goods in market which causes inflation

Answer 2

D.Increase in money supply

• In economics, inflation is the continuous rise in the general price level of goods and services in an economy over a period of time.
• This happens when the money supply increases and production decreases.
• Inflation occurs when prices throughout the economy rise, reducing the purchasing power of money.
• For example, in 1980 the average price of a movie ticket was $2.89. In 2019, the average movie ticket price rose to $9.16.
• Print more money and distribute it to your citizens. Legal depreciation (depreciation) of fiat currency.
• By buying government bonds from banks on the secondary market, they borrow new money to maintain a reserve balance through the banking system (the most common way).

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