An Increase in the Quantity of Money Causes Inflation Because

question 75

True/False

An increase in the quantity of money causes inflation because consumers with more money bid against each other for unchanged quantities of products and services, pushing up prices.

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Definitions:

Collateralized Loan

A loan that is secured by collateral, assets that the lender can seize if the borrower fails to repay the loan.

Prepaid Interest

The amount of interest that is paid in advance of the period to which it relates, often associated with loans or mortgages.

Loan Payable

Loan Payable is the liability account in a company’s balance sheet representing the amount owed to lenders that must be paid back in the future.

Interest Income

Income earned from the lending of funds or through investment in interest-bearing financial instruments.