2
QuizMultiple Choice

Economics and Social Studies

Question 2 • MA-US History II CR

Which behavior is encouraged by a high rate of inflation?

Answer
A
Banks provide lower interest rates.
B
Governments establish a welfare system.
C
People spend money instead of saving it.
D
Businesses choose to decrease production.

Explanation

When inflation is high, prices rise quickly, so money loses purchasing power over time. People may therefore spend their money sooner rather than save it, since the same amount may buy less later. The encouraged behavior is spending instead of saving, choice C.

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