Inflation:

Question

Inflation:

Quizplus · Accepted Answer

Inflation raises the cost of making purchases because it decreases the purchasing power of money, so more money is needed to buy the same quantity of goods and services.

Answer: B
 Inflation can result in a decrease in barter transactions because it may make people less willing to exchange goods and services for other goods and services if they are uncertain about the future value of the currency.

Answer: C
 Inflation encourages people to hold cash because the value of their cash holdings will decrease less than the value of other assets, such as stocks or bonds, during periods of high inflation.

Answer: D
 Changes in interest rates can affect inflation, but they are not the only cause. Other factors, such as changes in the money supply, exchange rates, and supply and demand for goods and services, can also affect inflation.