The U.S. government is continually adding security features to its paper currency to help make counterfeit money easier to detect. If counterfeit currency remained undetected, a vast increase in the supply of counterfeit U.S. currency would
A)decrease aggregate demand in the short run.
B)lead to inflation.
C)reduce the amount of M1.
D)lower the nominal income of the average U.S. worker.

Question

Quizplus · Accepted Answer

An increase in the supply of counterfeit currency would effectively increase the money supply, leading to inflation as more money chases the same amount of goods and services.

The US Government Is Continually Adding Security Features to Its Paper