Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 1 - Part I - Ten Principles of Economics - Questions for Review - Page 17: 9

Answer

Inflation is the overall rise in the levels of prices. Inflation and unemployment are inversely related as seen on the Phillip's curve. Inflation is caused by government over printing of currency. The overall rise in the supply of money in the economy causes inflation and has occurred in countries such as Germany in 1921 with newspapers.

Work Step by Step

This question is testing your knowledge of vocabulary. To determine what causes inflation think to yourself " why do prices rise?" Price rises only when there is too much money because if it didn't do so scarcity would occur as produce would run shortages.
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