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Category - Economics

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What is the most common effect when a government prints a great deal of money?
  1. Prices in that currency go up.
  2. That nation becomes wealthier because it has more money.
  3. The nation’s overall liquidity increases.
  4. The currency becomes more popular for savings.
Explanation
Answer: A - If a government prints a great deal of money, prices in that currency go up. This is a type of inflation. As money is printed, the currency’s real value drops and prices in that currency rise to make up the difference. The price of those same goods in another currency isn’t generally affected.
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