An analysis of countries experiencing rapid inflation indicates that inflation is generally
A) caused by strong labor unions that push wages up rapidly.
B) caused by rapid growth in the money supply.
C) the result of restrictive macroeconomic policy, which pushes up interest rates.
D) the result of bad weather conditions that reduce the supply of agriculture products.

Question

Quizplus · Accepted Answer

Rapid inflation is generally caused by a rapid growth in the money supply, as increased availability of money leads to increased demand for goods and services, driving up prices. While factors such as strong labor unions, restrictive macroeconomic policy, and bad weather conditions may contribute to inflation in certain cases, they are not as consistently observed as the relationship between money supply growth and inflation.

An Analysis of Countries Experiencing Rapid Inflation Indicates That Inflation