Question

What is one reason why a government will deliberately inflate its national money supply?

The action promotes the long-term health of the national economy.
The action is part of efforts to attract overseas investors and immigrant labor.
The action is part of printing money to pay off the government’s debts.
The action tamps down the growth rate of an overheated economy.
The action helps the money supply keep up with the consequences of rising prices.

Answer 1

The action helps the money supply keep up with the consequences of rising prices

Step-by-step explanation:

• The monetary expansion involves the adjustment of banks and the public money as they have reserve ratio as the ratio rises the government tries to expand or inflates the nation's money supply in the country as the rise in prices is not good for the economy.

• As the process of inflation in the economy is for a temporary period it's measured by the consumer price index and consumer expenditures. So to bring about stability in the money market the govt tries to bing a change in the supply of money.

• Caused by the changes in GDP and the unemployment index.