Question

The printing of more currency notes will increase inflation." Do you agree with this statement? Present arguments in support of your answer

Answer 1

YES

Inflation is a persistent rise in the general price levels

Types of inflation

1. demand pull inflation – this occurs when demand exceeds supply. When demand exceeds supply, prices rise

2. cost push inflation – this occurs when the cost of production increases. This leads to a reduction in supply. Higher prices are the resultant effect

PRINTING MORE MONEY WOULD INCREASE THE MONEY SUPPLY. If money supply increases faster than increase in real output, inflation occurs and money becomes worthless

Hyperinflation is usually caused by increases in money supply.

the hyperinflation experienced in Venezuela was as a result of increase in money supply

Step-by-step explanation: