9
QuizMultiple Choice

Money

Question 9 • * HSA 26-27 Economics

Why must old currency be taken out of circulation when new currency is made?

Answer
A
The old currency is more valuable than the new currency.
B
The new currency is much more liquid than the old currency.
C
Too much currency in an economic system will cause inflation.
D
Too much currency in an economic system will create artificial wealth.

Explanation

When new currency replaces old currency, taking the old money out of circulation helps keep the total amount of money from growing too much. If the money supply becomes excessive relative to the goods and services available, prices can rise, causing inflation. Therefore, the best answer is “Too much currency in an economic system will cause inflation.”

AI-written and checked against the verified answer.

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