TOLFA Segment 11, Question 2

Suppose in a closed society the amount of goods and services in circulation were constant, but the amount of money increased one year by 20%. What would happen to prices? They would stay about the same
They would rise, by about 20%
They would fall, by about 25%
They would rise, by about 15%

This Question was to make sure you grasp the nature of inflation, which government people blame on everyone but themselves - notably, "greedy businessmen." Don't hurry away; even when you've got the right answer, try clicking on the others to see why they are wrong! Then when you have correctly answered this make notes in your student notebook, go to Question 3.

Segment 11 Page