Which of the following results from the output of goods and services not matching the increase in money supply?

Question

Quizplus · Accepted Answer

When the output of goods and services does not match the increase in money supply, it leads to a situation known as inflation, where the general price level of goods and services rises. This is because there is more money in circulation but the same amount of goods and services, resulting in an increase in demand, which drives up prices. Deflation is the opposite situation, where there is a decrease in the general price level, but it is not the result of an increase in money supply. Arbitrage, bandwagon effect, and carry trades are not directly related to this scenario.

Which of the Following Results from the Output of Goods