If a government supplies more money than the quantity people want to hold,

Question

Quizplus · Accepted Answer

If the government supplies more money than the quantity people want to hold, there will be an excess of money in the economy. This excess money will lead to increased spending as people will have more money to spend. As the demand for goods and services increases, the price level in the economy will also increase. This is known as demand-pull inflation. Therefore, the correct answer is B, spending will increase and the price level will rise.

If a Government Supplies More Money Than the Quantity People