TOLFA Segment 11, Question 6

Why is it that paper money distorts financial decisions, commercial and domestic? Its future value can not be known; it will be set by the whim of politicians. So no plan can be formed.
Banks are artificially eager to make loans, using the Fractional Reserve system; money is "too easy" to borrow and therefore borrowers will not make a proper, sound assessment of risk and reward.
Public demand is unpredictable, for the goods or services a business produces - because future prices are unpredictable, being affected by unknown future inflation rates. Therefore, it's just as likely that a factory will produce too much or too few as the quantity that happens to be just right, maximizing profits.
Business is always affected by competition, and some of that is foreign, and some of that is indirectly subsidized by US Government handouts of its dollars to foreign countries it favors.

All answers here are correct, so review each. Then make notes in your student notebook, and go to Question 7.

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