Question

When inflation rises, people will desire to hold

Select one:
a. less money and will go to the bank less frequently.
b. less money and will go to the bank more frequently.
c. more money and will go to the bank less frequently.
d. more money and will go to the bank more frequently.

Answer 1

As inflation increases, individuals prefer to hold less money due to its decreasing value and will likely go to the bank more frequently to manage their finances in ways that mitigate inflation's impact. Option b

Step-by-step explanation:

When inflation rises, individuals will naturally want to hold less money because the purchasing power of their cash holdings decreases. This leads to people preferring to spend, or invest, their money rather than hold onto it.

Therefore, people are likely to go to the bank more frequently to make transactions that could preserve their wealth, such as depositing money into interest-bearing accounts, or investing in assets that aren't as susceptible to inflation. Hence, the correct answer is b. less money and will go to the bank more frequently. Option b