An analysis of countries experiencing rapid inflation indicates that inflation is generally
A) caused by strong labor unions.
B) the result of restrictive macroeconomic policy, which pushes up interest rates.
C) caused by the impulse buying of consumers, who continue to buy the same goods even when prices rise.
D) the result of rapid growth in the money supply.

Question

Quizplus · Accepted Answer

Rapid inflation is typically caused by an increase in the money supply, which leads to more money chasing the same amount of goods and services. This can happen due to factors such as excessive government spending, loose monetary policy, or high levels of borrowing. Strong labor unions, restrictive macroeconomic policy, and impulse buying by consumers are not typically major causes of inflation.

An Analysis of Countries Experiencing Rapid Inflation Indicates That Inflation