If inflation occurs when the money supply expands, what happens when the money supply contracts? (Think about this one) Prices will adjust to compensate for the altered size of the money supply. The price of everything is dramatically reduced to the point of nearly being 0. O Nothing happens. O Prices also rise.

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Chapter1: Making Economics Decisions
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If inflation occurs when the money supply expands, what happens when the money supply
contracts? (Think about this one)
Prices will adjust to compensate for the altered size of the money supply.
The price of everything is dramatically reduced to the point of nearly being 0.
O Nothing happens.
O Prices also rise.
Transcribed Image Text:If inflation occurs when the money supply expands, what happens when the money supply contracts? (Think about this one) Prices will adjust to compensate for the altered size of the money supply. The price of everything is dramatically reduced to the point of nearly being 0. O Nothing happens. O Prices also rise.
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