The expansion of the money supply at a rate that exceeds the increase in goods and services will likely result in ________.

A) expanding economy
B) increased inflation
C) interest rate declines
D) lower GDP

Question

Lauryn Schroder · Accepted Answer

Final Answer : B, Explanation :  When the money supply grows faster than the increase in goods and services, it creates a situation of too much money chasing too few goods. As a result, the demand for goods and services increases but the supply remains the same, leading to an increase in prices, i.e., inflation. Therefore, option B is the correct answer.

The expansion of the money supply at a rate that exceeds the increase in goods and services will likely result in ________.

A) expanding economy
B) increased inflation
C) interest rate declines
D) lower GDP

Definitions

Learning Objectives

Learning Objectives

Related questions

The expansion of the money supply at a rate that exceeds the increase in goods and services will likely result in ________.A) expanding economyB) increased inflationC) interest rate declinesD) lower GDP

Definitions

Learning Objectives

Learning Objectives

Related questions

The expansion of the money supply at a rate that exceeds the increase in goods and services will likely result in ________.

A) expanding economy
B) increased inflation
C) interest rate declines
D) lower GDP