In the long run, inflation is caused by
A)governments that raise taxes so high that it increases the cost of doing business and, hence, raise prices.
B)banks that have market power and refuse to lend money.
C)None of these answers.
D)governments that print too much money.
E)increases in the price of inputs, such as labour and oil.

Question

Quizplus · Accepted Answer

Inflation occurs when the supply of money in an economy exceeds the demand for goods and services. As a result, the value of money falls, causing prices to rise. The most common cause of inflation is when governments print too much money, leading to an oversupply of money in circulation. This oversupply of money reduces the value of money, causing prices to rise. Therefore, option D is the correct answer.

In the Long Run, Inflation Is Caused by