If there is too much money moving in the economy, what are the possible consequences?
Understand the Problem
The question is asking about the economic implications of too much money circulating in the economy, specifically regarding unemployment and inflation. It presents multiple-choice answers relating to these economic effects.
Answer
Prices may rise, causing inflation.
The final answer is prices may rise, causing inflation.
Answer for screen readers
The final answer is prices may rise, causing inflation.
More Information
When too much money circulates in the economy, it increases the overall demand, causing prices to rise and leading to inflation.
Tips
A common mistake is thinking that too much money will always lead to decreased prices. However, increased money supply typically leads to higher prices due to increased demand.
Sources
- What Is Hyperinflation? Causes, Effects, Examples, and How to ... - investopedia.com
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