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WAEC Economics 2025 Question 10

Question 10

Money and Inflation

Other things being equal, a contraction in the amount of money in circulation will

  1. A.lead to a fall in the value of money.
  2. B.increase aggregate demand for commodities.
  3. C.cause the value of money to rise.
  4. D.result in an increase in price level.
Show the answer and explanation

Answer: C (cause the value of money to rise.)

Explanation

Less money chasing the same goods lowers prices, so each unit of money buys more.