Money Supply Growth That Causes Hyperinflation Is in Turn, Caused

question 117

Multiple Choice

Money supply growth that causes hyperinflation is in turn, caused by:

• A) large budget deficits.
• B) a reduction in the velocity of money.
• C) an increase in oil prices.
• D) sustained increases in government spending and taxes.

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Definitions:

Nominal Rate

The nominal rate is the interest rate stated on a loan or financial product, not accounting for inflation or other factors that affect purchasing power.

Repayment Of Principal

The process of paying back the original amount borrowed in a loan, separate from interest payments.

Equal Installments

A method of loan repayment where the borrower pays the lender a constant amount of money periodically, covering both principle and interest.

Repay

The action of paying back borrowed money to the lender.