When there is too much money flowing and too few goods, it is likely to lead to ________.

Question

Quizplus · Accepted Answer

When there is excess money in circulation and a shortage of goods, demand for those goods will increase, and their prices will go up. This results in inflation as the value of money decreases. Therefore, option D is the correct answer. Tax cuts or interest rate cuts may stimulate economic growth; however, they may exacerbate the inflation problem. A rise in taxes is unlikely to be a solution to this problem, as it will add to the already high demand for goods.

When There Is Too Much Money Flowing and Too Few