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WAEC Economics 2006 Question 29

Question 29

Money and Inflation

The policy of government to increase the supply of money to meet its own expenditure plans is likely to be

  1. A.speculative
  2. B.deflationary
  3. C.inflationary
  4. D.contractionary.
Show the answer and explanation

Answer: C (inflationary)

Explanation

Creating more money to spend raises total demand without more goods, so prices tend to rise (inflation).