Which of the following is the primary cause of inflation?
A)an increase in the quantity of money
B)an increase in government spending
C)an increase in unemployment
D)an increase in productivity

Question

Quizplus · Accepted Answer

The primary cause of inflation is an increase in the quantity of money in circulation. When there is more money available to purchase goods and services in an economy, prices will typically rise as demand outpaces supply. This increase in the money supply can come from various sources, including central banks printing more money, commercial banks lending more money, or the government increasing spending and borrowing. While government spending can contribute to inflation, it is not necessarily the primary cause. An increase in unemployment could actually dampen inflation, as it reduces consumer demand and puts downward pressure on prices. An increase in productivity could help to increase the supply of goods and services, but it would not necessarily lead to inflation unless accompanied by an increase in the money supply.

Which of the Following Is the Primary Cause of Inflation