Question

In the long run (say, over several decades), the primary cause of inflation is ___.

(A) an increase in interest rates
(B) an increase in the minimum wage
(C) an increase in the amount of money in an economy
(D) a shortage of input commodities, such as crude oil
(E) improvements in technology

Answer 1

The primary cause of inflation in the long run is an increase in the amount of money in an economy because it creates more demand for goods and services than the supply can meet.

Correct option is C ( an increase in the amount of money in an economy ).

Step-by-step explanation:

In the long run, the primary cause of inflation is an increase in the amount of money in an economy. This is because when there is more money available, it puts upward pressure on prices as there is more demand for goods and services than the supply can meet. This is known as demand-pull inflation. For example, if the government were to increase spending and distribute more money to the public, people would have more purchasing power and would compete with each other to buy goods, driving up prices.