Question

_____ is caused when the Federal Reserve increases the money supply. Monetary inflation Price inflation Fixed income

Answer 1

Monetary inflation is the correct answer

Answer 2

Inflation is the continuous and generalized increase in the prices of the products of an economy. The main cause of inflation is the excess currency in the economy. If the government adopts an expansionary monetary policy, that is, it increases the money supply, a monetary inflation occurs. That is, an inflation for excess currency in circulation.