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Which of the following happens during a period of rapid inflation?
a. the value of money increases which causes people to spend rapidly which makes
inflation worse.
b. the value of money decreases which causes people to spend rapidly which makes
inflation worse.
c. the value of money increases which causes people to save more which makes
inflation worse.
d. the value of money decreases which causes people to save more which decreases
the problem of inflation.
2 Answers
- ellendeepLv 47 years ago
@An increase in the amount of currency in circulation due to consumers, businesses and the government demand more goods and services than the economy can provide, resulting in sharp fall in its value and the greater demand allows manufacturers and service providers to raise their prices.
@ hence, the focus is on money supply. If there is more money supply due to demand of goods and purchasing power and less supply of goods, it causes an increase in price resulting in inflation.
@ therefore, the answer is b.
