Which of the following would be the most likely to cause inflation?

Question

Quizplus · Accepted Answer

Sustained increases in the money supply can lead to excess demand for goods and services, which can cause prices to rise, thus leading to inflation. This is known as demand-pull inflation.

Option A, massive increases in government spending, can also cause inflation, but only if the government spends beyond its means, which leads to excessive demand and inflation.

Option C, increases in interest rates, can actually help curb inflation by reducing demand and slowing down economic activity.

Option D, a decline in the purchasing power of the dollar, is a result of inflation, not a cause of it.

Which of the Following Would Be the Most Likely to Cause