In the long run, inflation is caused by
A)greedy monopolists.
B)global warming.
C)aggressive labour unions.
D)growth in the money supply.
E)the tradeoff between aggregate output and inflation.

Question

Quizplus · Accepted Answer

Inflation is caused by growth in the money supply, as when there is more money in circulation, the value of each individual unit of currency decreases, and thus, prices rise. This increase in the money supply can come from various sources, such as the central bank printing more money, increased borrowing by the government, or increased lending by commercial banks.

In the Long Run, Inflation Is Caused by