The U.S. economy begins to slow, so the U.S. prints more currency. What is the risk of this action? (I think its b or c, but i cant figure out which one.)

The currency will be hoarded.

The currency will lose value.

The government will gain debt.

The government will pressure banks.

Question

The U.S. economy begins to slow, so the U.S. prints more currency. What is the risk of this action? (I think its b or c, but i cant figure out which one.) 

 The currency will be hoarded.

 The currency will lose value.

 The government will gain debt.

 The government will pressure banks.

anonymous · Answer

You're close! It's (B) the currency will lose value. Basically, the more of it that's out there, the less value it could have since there's so much of it in the market.

The other answers don't quite fit because if there's a lot of it, there won't be much hoarding, the government can use the extra currency to curb its debt (at the risk of inflation), and more liquidity (which is one of the reasons why printing more money is done) means that banks would technically be able to loan to more people.

hailsy_ · Answer

Okay! Thanks so much! could you help me with one more?

hailsy_ · Answer

A vendor makes a new smartphone and presells four thousand units for $300 each. The factory has the capacity to produce one thousand smartphones per month. Anticipated sales are five hundred units per month. Which of these would occur during the first few months of sales?

 Limited demand would increase the price.

 Limited supply would increase the price.

 Unlimited demand would decrease the price.

 Unlimited supply would decrease the price.

hailsy_ · Answer

@Captain_Page_Turner

anonymous · Answer

Limited supply would increase the price.