Increases in the expected inflation rate cause
A)the velocity of money to increase
B)the velocity of money to decrease
C)money to become a better store of wealth
D)decreases in the actual price level
E)the money supply to increase

Question

Quizplus · Accepted Answer

When expected inflation increases, people tend to spend their money faster before the prices increase, resulting in an increase in the velocity of money.

Increases in the Expected Inflation Rate Cause