JACKSONIAN DEMOCRACY 1825 1850
PRESIDENT ANDREW JACKSON
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Banks speculated in the stock market
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Banks refused to issue loans
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Banks issued too much paper money
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Banks would only allow transactions in gold and silver
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Detailed explanation-1: -If the government prints too much money, people who sell things for money raise the prices for their goods, services and labor. This lowers the purchasing power and value of the money being printed. In fact, if the government prints too much money, the money becomes worthless.
Detailed explanation-2: -Banks operational costs may rise in times of high inflation, just like those of other businesses. Depending on the extent to which banks can pass on cost increases to customers, higher inflation eats into a bank’s cost-to-income ratio (operating costs divided by total income).
Detailed explanation-3: -Inflation Targeting If prices rise faster than their target, central banks tighten monetary policy by increasing interest rates or other hawkish policies. Higher interest rates make borrowing more expensive, curtailing both consumption and investment, both of which rely heavily on credit.
Detailed explanation-4: -Long-lasting episodes of high inflation are often the result of lax monetary policy. If the money supply grows too big relative to the size of an economy, the unit value of the currency diminishes; in other words, its purchasing power falls and prices rise.