Question

the government of west Tarragon declared the lowest unit of its currency to be redundant from the next quarter.The polka, which is the lowest denomination of the currency in West Tarragon, is a copper coin that has been in circulation for the last 40 years. The government justified its decision by saying that the average consumer by pushing up the price level. Which of the following, if true, would strengthen Jenny's claim that taking the polka out of circulation will cause inflation? A.The prices of imported raw materials in West Tarragon are expected increase considerably during the nest quarter. B. If polka is made redundant, the system will only have coind of three denominations. C. Recent market analysis has projected an increase in cashless transactions by almost 40% by the end of this year, D. Many large retail firms in West Tarragon have already stopped accepting the polka. E. Most cash purchases are likely to be rounded off to a higher unit of the currency once the polka is taken out to the system.

Answer 1

E. Most cash purchases are likely to be rounded off to a higher unit of the currency once the polka is taken out to the system.

Step-by-step explanation:

A nation's inflation rate is given by the general rise in the price of its products and services. If the Polka is taken out of circulation, and most businesses will start rounding off their prices to a higher unit, then the general price level in West Tarragon will rise. If the Polka wasn't worth that much then the rise in the general price level will be small, but it still will be an increase.