Which of the following is true of inflation?

Question

Quizplus · Accepted Answer

Inflation is primarily caused by an increase in the supply of money in relation to the demand for goods and services, leading to an increase in prices. This increase in supply and demand for the currency can lead to inflation. Therefore, option B is the correct statement about inflation. Option A is incorrect as inflation can occur even if there is no increase in output. Option C is incorrect as inflation decreases people's purchasing power by increasing the cost of goods and services. Option D is incorrect as unemployment can affect inflation due to its impact on the level of demand in the economy.

Which of the Following Is True of Inflation