Describe at least two negative outcomes of having too much money and credit in the economy

Question

Adelaide Patton

Business

29 December, 07:03

Describe at least two negative outcomes of having too much money and credit in the economy

+4

Answers (1)

Know the Answer?

Cedric Duffy · Answer 1

1. a.) It would cause a devaluation of currency, and b.) leads to inflation of market prices, usually without equal inflation in wages.

2. a.) It would cause a scarcity of currency, leading to rapid deflation and b.) overproduction of goods means major markets would plummet in value, outbalancing demand, leading to major losses for the producers.

As you can see, both scenarios can lead to recession or depression. Small fluctuations are normal or even sought after, but too far in either direction leads to bad things.