An increase in the rate of inflation would be most likely to result from a(n):

A) decrease in spending by the federal government. C) rise in interest rates.

B) rise in the unemployment rate. D) increase in the supply of money in circulation

A large decrease in the money supply would tend to:

A) reduce the supply of gold held by the federal government.

B) create shortages that would cause prices of goods and services to rise.

C) throw the economy into a recession.

D) reduce the size of the federal government's deficit.

President Koolov, the leader of the nation of Rapidia, is reluctant to raise taxes, but wants to expand many government services and increase the size of the Rapidian armed forces. He has decided to pay for all of the desired expenditures by printing more money. If President Koolov carries out his plan and rapidly increases the supply of money, Rapidia is likely to experience:

A) a severe recession. C) widespread surpluses of goods and services.

B) reduced private sector spending. D) an increase in the rate of inflation.