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Explain briefly why you think the following statement is true, false, or ambiguous. Competitive currencies would...

Explain briefly why you think the following statement is true, false, or ambiguous.

Competitive currencies would work automatically to provide consumers with protection against inflation.

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Answer #1

The given statement is true. We can draw evidence from the paper by 'Thomas L. Hogan' on ' Competition on currency- The potential for private money'. which states that competitive currencies can lower inflation and the paper draws this conclusion from the fact that the competitive production of currency helped the U.S. economy achieve low levels of price inflation. We can also conclude that the above statement is true as when the currency is competitive, there will be no shortage or surplus of the currency. Therefore, changes in money supply won't cause inflation.

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