Inflation typically arises from:

Question

Quizplus · Accepted Answer

Inflation typically arises from a sufficiently rapid increase in the money supply, which leads to an increase in demand for goods and services. As demand outpaces supply, prices are driven up, resulting in inflation. A constant money supply (option B) would not lead to inflation, and a rapid contraction of the money supply (option A) would likely result in deflation. Option D is not the best answer, as an increase in the price level is a result of inflation, rather than the cause.

Inflation Typically Arises From