Which of the following is an important cause of inflation in an economy?
A)increases in productivity in the economy
B)the influence of positive externalities on the economy
C)lack of property rights in the economy
D)growth in the quantity of money in the economy

Question

Quizplus · Accepted Answer

Inflation can occur when the quantity of money in an economy grows faster than the growth rate of goods and services. This is because there is more money available in the economy to bid for the same amount of goods, which leads to an increase in prices. Factors such as increases in productivity or the influence of positive externalities may contribute to economic growth but do not necessarily cause inflation. Lack of property rights can also negatively impact economic growth but is not directly related to inflation.

Which of the Following Is an Important Cause of Inflation