MTTC Social Studies 2025 – 400 Free Practice Questions to Pass the Exam

Question: 1 / 400

What is one potential consequence of high inflation on the economy?

Decreased prices for goods and services

Increased purchasing power of income

Higher costs for businesses

High inflation leads to a rise in the general price level of goods and services in the economy. One of the potential consequences of this situation is higher costs for businesses. As prices increase, the costs of raw materials, labor, and other operational expenses tend to rise as well. Businesses often respond to these increased costs by passing them on to consumers in the form of higher prices, further contributing to inflationary pressures. This creates a cycle where businesses must continually adapt to rising costs, which can strain profit margins and impact overall economic stability. Understanding this relationship helps clarify how inflation can play a significant role in shaping business operations and economic policies.

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Reduced interest rates for loans

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