As prices rise,a fixed money supply will be able to buy fewer goods and services.This effect is due to a(n)

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This effect is known as inflation, where the general price level of goods and services increases, and the purchasing power of money declines. Therefore, a fixed money supply will be able to buy fewer goods and services. Reduction in interest rates may impact borrowing and investing, but it is not directly related to inflation. Increase in aggregate demand can lead to inflation, but it does not explain why a fixed money supply can buy fewer goods and services. Increase in income may lead to an increase in demand, but it does not explain why a fixed amount of money can buy fewer goods and services.

As Prices Rise,a Fixed Money Supply Will Be Able to Buy