How does a high rate of inflation affect the value of money

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1. During the late nineteenth century, the United States experienced a period of sustained deflation, or a falling price level. Explain in terms of the quantity theory of money how a deflation is possible. Is it necessary for the quantity of money to decline for deflation to occur?

2. How does a high rate of inflation affect the value of money? How does it affect the usefulness of money as a medium of exchange?

Reference no: EM131305564

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