Which of the following events could cause inflation in the United States-a country that uses fiat money?
A) There is a discovery of a new silver mine.
B) There has been a decision made to switch from a currency based on the amount of gold (a scarce metal)to a currency based on the amount of silver (a plentiful metal).
C) Individuals are frustrated by the infrequent occurrence of the double coincidence of wants.
D) The government decides to print more money.
E) The government decides to transition to a commodity-backed money.

Question

Quizplus · Accepted Answer

Inflation can occur when there is an increase in the money supply. If the government decides to print more money, there will be an excess of money in circulation and prices for goods and services will increase, leading to inflation. The other options do not necessarily lead to inflation in a fiat money system.

Which of the Following Events Could Cause Inflation in the United