which of the following is true under rapid inflation? People

Assessment: WAEC SSCE - Economics - 2007 (Objective) Subject: Economics

Question 1 Report

which of the following is true under rapid inflation? People
Answer Details
Under rapid inflation, people hardly want to lend money. This is because the value of money decreases rapidly, and so the money that is lent out may not be worth as much when it is repaid. This makes lending money a risky proposition, and so people may avoid doing it. Additionally, people may prefer to spend their money rather than lend it out, as the cost of goods and services may increase rapidly, making it more expensive to buy them later. Therefore, they may prefer to use their money to purchase goods and services immediately rather than hold onto it.

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