In periods of high inflation,
A) people want to hold on to as much money as possible.
B) the purchasing power of money is decreasing.
C) nobody wants to work and earn income.
D) low nominal interest rates are likely to result.
E) nobody wants to buy goods and services.

Question

Quizplus · Accepted Answer

In periods of high inflation, the purchasing power of money decreases, meaning that each unit of currency can buy fewer goods and services than before. This often leads to people wanting to spend money quickly before it loses even more value. Holding on to money during high inflation can actually lead to a loss of purchasing power over time.

In Periods of High Inflation