Inflation _____
A) increases the value of the dollar compared to the value of goods.
B) maintains the purchasing power of the dollar over the long term.
C) erodes confidence in the value of the dollar over the long term.
D) raises everyone's standard of living.
E) encourages the hoarding of banknotes.

Question

Quizplus · Accepted Answer

Inflation erodes confidence in the value of the dollar over the long term, as it decreases the purchasing power of the dollar. When inflation rises, people may start to lose faith in the value of the currency, leading to decreased investment and economic instability.