What is meant by the expression, "There is too much money chasing too few goods"?
A) People spend too much time chasing after money.
B) An expansion in the supply of money relative to the availability of goods and services is causing an increase in the general level of prices.
C) The value of money will tend to decline when the supply of gold increases.
D) People would be better off if the monetary authorities increased the supply of money more rapidly.

Question

Quizplus · Accepted Answer

This phrase means that there is more money available in the economy, but there are not enough goods and services to purchase with that money. As a result, prices increase as demand outstrips supply. This often happens during periods of rapid economic growth or inflation. Option A is incorrect as it does not relate to the economic context of the phrase. Option C is incorrect as it refers specifically to the gold standard, which is not relevant to contemporary monetary systems. Option D is also incorrect, as increasing the money supply too rapidly can lead to inflation and other economic problems.

What Is Meant by the Expression, "There Is Too Much