20
QuizMultiple Choice

Inflation and Purchasing Power

Question 20 • 26-27 Ignite Financial Literacy Personal Finance - EL3403

Which of the following is a cause of inflation?

Answer
A
consumers growing apathetic and failing to notice attempts to raise prices
B
demand continually exceeding supply, leading to an imbalance of money and goods in the market
C
a natural consequence of the use of money instead of trade goods
D
government intervention demanding that prices be raised

Explanation

Inflation can occur when demand for goods and services persistently exceeds the supply available. With more money competing for too few goods, prices tend to rise. This matches choice B, “demand continually exceeding supply”; using money instead of barter does not automatically cause inflation.

AI-written and checked against the verified answer.

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