An increase in the quantity of money causes inflation because consumers with more money bid against each other for unchanged quantities of products and services, pushing up prices.

Question

Quizplus · Accepted Answer

An increase in the quantity of money can lead to an increase in demand for goods and services, which can result in a rise in prices if the supply of those goods and services does not increase proportionally. This is a basic principle of supply and demand economics.

An Increase in the Quantity of Money Causes Inflation Because