Principles of Macroeconomics 7th Edition

Published by South-Western College
ISBN 10: 1-28516-591-8
ISBN 13: 978-1-28516-591-2

Chapter 1 - Ten Principles of Economics - Questions For Review: 9

Answer

Inflation is an increase in the overall level of prices in the economy. In almost all cases of large or persistent inflation, it is caused by the growth in the quantity of money. When large quantities of money are created by the government, its value then falls.

Work Step by Step

Note that the student can read more about inflation and how it relates to price rises in Principle 9 on page 15.
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