Question

When the circulation of money in the market , it causes an increase in the supply of money.

• A. increases
• B. decreases
• C. changes
• D. does not change

Answer 1

The correct option is A increases

An increase in the transaction of money in the market is also referred to as circulation of money. When the circulation of money in the market increases, it causes a general increase in the supply of money. When there is an increase in money, income of people, and purchasing power, then the effective demand of commodities and services increases, but the total supply does not increase according to it. So, it leads to price rise.