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2 years ago

What type of relationship exists between the growth of the money supply and changes in the inflation rate?

Business

1 answer:

blondinia [14]2 years ago

5 0

Answer: A direct relationship

Explanation: The link or relationship between money supply and inflation rate : In normal economic circumstances, if the money supply grows faster than real output it will cause inflation. In a depressed economy (liquidity trap) this correlation breaks down because of a fall in the velocity of circulation. This is why in a depressed economy Central Banks can increase the money supply without causing inflation. This occurred in the US between 2008-14

However, when the economy recovers and velocity of circulation rises, increased money supply is likely to cause inflation.

In other words ,If you are Increasing the money supply faster than the growth in real output will cause inflation. The reason is that there is more money chasing the same number of goods. Therefore, the increase in monetary demand causes firms to put up prices.

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2 years ago

The dollar-euro exchange rate is $1.25 = €1.00 and the dollar-yen exchange rate is ¥100 = $1.00. What is the euro-yen cross rate

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Answer:

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Explanation:

As per the data given in the question,

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3 years ago

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Answer:

Credit Cards

Payday Loans

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Explanation:

In the field of economics, credit means to have the ability of having goods or the services before the payment of the goods which can be paid later in the future to the other party.

The following can be bought on credits and can be paid in cash later on. These includes :

Credit cards -- credits card are used to purchased item on credits to which the payment is done on a later date in the future.

Payday loans -- payday loans is a type of loan or money borrowed from someone with an interest that is to be paid in the future.

Auto loans -- auto loans are available to buy a car in credit and repaying the loan in cash to the bank in installments in the future.

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2 years ago

What type of relationship exists between the growth of the money supply and changes in the inflation​ rate?

What type of relationship exists between the growth of the money supply and changes in the inflation rate?