Which of the following conditions imposes the largest disincentive to speculate in precious metals and collectibles?
A) runaway inflation
B) negative real interest rates
C) price stability
D) significant increases in the general price level
E) a breakdown in the monetary system

Question

Quizplus · Accepted Answer

Price stability imposes the largest disincentive to speculate in precious metals and collectibles. When prices of goods in the economy are stable, there is little opportunity for price appreciation and speculation in alternative assets like precious metals and collectibles becomes less attractive. In contrast, runaway inflation, negative real interest rates, significant increases in the general price level, and a breakdown in the monetary system all create an environment that encourages speculation and investment in alternative assets.

Which of the Following Conditions Imposes the Largest Disincentive to Speculate