If Too Much Money Is Available Relative to the Supply

question 18

Multiple Choice

If too much money is available relative to the supply of goods, one problem that may result is:

• A)deflation.
• B)inflation.
• C)devaluation.
• D)a fixed currency rate.
• E)uneven taxation rates.

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Definitions:

GIC

A finance option available in Canada, the Guaranteed Investment Certificate provides investors with a secured rate of return over an established time period.

Equivalent Value

The monetary value considered to be equal in worth to a specified amount under different conditions or in a different context.

Rate of Return

An investment's performance, marked by gains or losses during a defined period, articulated as a percentage of its beginning cost.

Compounded Semi-annually

This refers to the process of calculating interest on a principal amount at two intervals in a year, effectively increasing the amount of interest earned or paid.