0:00
All right.
00:02
In this question, it asks us, if a nation has high in persistent inflation, the most likely explanation is, and all the following.
00:11
In order to solve this problem, you have to know one thing, which is basically what is inflation, right? what does inflation mean? the answer to that, inflation is a phenomenon.
00:24
Well, you'll observe general prices going up and the purchasing power of your dollar going down.
00:30
What that means is that if you're able to buy, let's say, a loaf of bread for $1, after inflation, that loaf of bread would now cost $3, which means that the dollar that you have, it has less power to purchase goods.
00:43
So let's look at these options.
00:45
Option a causes the central bank creating excessive amounts of money.
00:50
What we can deduce from that wording is that bank is printing out money at a rate that there's too much money in the market.
01:00
There's too much money in the economy, which causes individual dollars to lose value.
01:04
So this looks like something that could be our answer...