Question 17
Money and InflationOther things being equal, an increase in the supply of money may lead to
- A.fall in the velocity of circulation of money
- B.rise in the general price level
- C.fall in the demand for commodities
- D.rise in the rate of unemployment in the short-run
Show the answer and explanation
Answer: B (rise in the general price level)
Explanation
More money chasing the same goods raises prices.