Countries with the highest inflation rates are likely to have
A)the highest rates of money growth.
B)small budget deficits relative to GDP.
C)the lowest interest rates.
D)nonaccommodating monetary policy.

Question

Quizplus · Accepted Answer

Countries with high inflation rates are likely to have high rates of money growth because inflation is caused by an increase in the supply of money in the economy. When the supply of money increases faster than the supply of goods and services, this leads to inflation. Therefore, countries with high inflation rates must have a high rate of money growth.

Countries with the Highest Inflation Rates Are Likely to Have