Inflation cannot continue indefinitely without increases in the money supply.

Question

Quizplus · Accepted Answer

Inflation occurs due to an increase in the general price level of goods and services. This increase in prices is often driven by an increase in the money supply, either through government action (printing more money) or through factors such as a booming economy or increased consumer borrowing. As prices rise, consumers and businesses must spend more money to purchase the same goods and services, leading to a greater demand for money. If the money supply does not increase in response, this can lead to a shortage of money and decreased economic activity. Therefore, inflation cannot continue indefinitely without corresponding increases in the money supply.

Inflation Cannot Continue Indefinitely Without Increases in the Money Supply