The Sponeto national bank advocates increasing the money supply to encourage investment within the country. Which of the following, if True, would strengthen the case that this will cause inflation?

Question

Quizplus · Accepted Answer

B) Increasing the money supply would cause banks to lower interest rates, since money is less scarce, which tends to lead to higher prices and inflation. The creation of jobs (Choice A) in a growing economy may be accompanied by inflation but does not in itself cause inflation. Choices C and D would not be associated with an inflationary economic environment. Choice E would not strengthen the case that increasing the money supply would cause inflation.

The Sponeto National Bank Advocates Increasing the Money Supply to Encourage