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WAEC Economics 2007 Question 30

Question 30

Money and Inflation

Which of the following is true under rapid inflation? People

  1. A.demand less foreign exchange
  2. B.set up businesses
  3. C.rush to pay their taxes
  4. D.hardly want to lend money.
Show the answer and explanation

Answer: D (hardly want to lend money.)

Explanation

Inflation reduces the real value of money paid back later, so lenders lose and people avoid lending.