Question

Explain why an unlimited printing of money would cause economic problems.

Answer 1

Answer:

Unlimited printing of money will cause the problem of inflation.

Explanation:

Inflation is a general increase in the price of goods and services.

It can be caused by the following:

Demand-pull inflation - This type of inflation is caused by an excess demand for goods and services by consumers without commensurate supply from suppliers.

Cost-push inflation - This type of inflation is caused by an increase in the price of goods and services.

Lastly, out of others, I will like to discuss inflation caused by unlimited printing money.

I sometimes wonder why the country cannot just prompt money so that we can all be smiling and spending cash together. The fact is that this will reduce the purchasing power of money because it is in excess and ultimately leads to inflation.

When there is unlimited printing of money in a country, the cash in the circulation will be in excess, hence more money will be needed to buy few product. That is an indication of inflation.