The economy in the nation of Sponeto has been stagnant for a long time.The government and central bank of Sponeto have been considering options for what can be done to help stimulate investment and growth in the economy. The Sponeto national bank advocates increasing the money supply to encourage investment within the country.Which of the following,if true,would strengthen the case that this will cause inflation?

Question

Quizplus · Accepted Answer

Lower interest rates can lead to increased borrowing and spending, which can increase demand and potentially lead to inflation if the supply of goods and services does not keep up.

The Economy in the Nation of Sponeto Has Been Stagnant