Question

what are the signs of high inflation? check all that apply.
□ production begins to fall.
□ production begins to rise.
□ interest rates decrease.
□ interest rates increase.
□ purchasing power falls.
□ fewer fixed rate bank loans.

Explanation:

• Production begins to fall: High inflation can disrupt business planning, leading to reduced production as costs rise and demand uncertainty increases.
• Interest rates increase: Central banks often raise interest rates to combat inflation, making borrowing more expensive.
• Purchasing power falls: Inflation means the same amount of money buys fewer goods/services, so purchasing power declines.
• Fewer fixed - rate bank loans: Lenders are reluctant to offer fixed - rate loans during high inflation as they fear repaying loans with less - valuable future money, so they prefer variable - rate or offer fewer fixed - rate loans.
• Production begins to rise is incorrect as high inflation typically harms production. Interest rates decrease is incorrect as rates tend to rise to fight inflation.

Answer:

• Production begins to fall.
• Interest rates increase.
• Purchasing power falls.
• Fewer fixed rate bank loans.