Question

Which accurately describes a cause for inflation ?

A) The Federal Reserve requires banks to keep more money on reserve
b) The Federal Reserve raises interest rates and slows economic activity c) The government places too much money into circulation.
D) The government places too little money into circulation.
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Answer 1

Answer:

c) The government places too much money into circulation.

Explanation:

Print money is the main cause for inflation, this is like any product because there is too much cash circulating and demand is low.

For example:

In the egg market there is a price nowadays, but if in some weeks appears more egg producers and sellers, and there are not more clients to buy that new market, the price will fall.

The most popular example nowadays in Venezuela the accumulated inflation in this country is more than 2,000%, because the government has printed a lot of money.