In the long run, inflation results from increases in a nation's money supply that exceed increases in its output of goods and services.

Question

Quizplus · Accepted Answer

Inflation occurs when there is an excess supply of money in the economy relative to the supply of goods and services. As the money supply increases, individuals and businesses have more money to spend, which drives up demand but can also result in higher prices. If the supply of goods and services does not increase at the same rate as the money supply, inflation will occur. Therefore, in the long run, inflation results from increases in a nation's money supply that exceed increases in its output of goods and services.

In the Long Run, Inflation Results from Increases in a Nation's