Periods of high, persistent inflation are almost always caused by:

Question

Quizplus · Accepted Answer

Rapid and sustained growth in the quantity of money is the main cause of high and persistent inflation. Inflation is essentially caused by too much money chasing too few goods, and when there is a rapid increase in the amount of money in circulation relative to the level of output in the economy, it leads to a rise in prices. This can occur due to factors such as high government spending, low interest rates, and an increase in the money supply by central banks. On the other hand, rising taxes, low productivity, and aggressive wage increases may contribute to inflation, but these factors are not the primary cause of sustained high inflation.

Periods of High, Persistent Inflation Are Almost Always Caused By