If there is a lack of money supply in comparison to the supply of goods and services, then the possible consequence would be ___

Question

If there is a lack of money supply in comparison to the supply of goods and services, then the possible consequence would be ___?

Options

a. Hyperinflation

b. Inflation

c. Deflation

d. Devaluation

Solution
Right Answer: Option c
Extra Details: Deflation is the decline in the prices of goods and services that occur when the rate of inflation falls below 0%. It will take place naturally, if and when the money supply of an economy is limited. It indicates deteriorating conditions. It is normally linked with significant unemployment and low productivity levels of goods and services.

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