What was a major economic problem facing the newly formed United States post-Revolution regarding currency?

What was a major economic problem facing the newly formed United States post-Revolution regarding currency?

• A. High taxes
• B. Inflation of paper money
• C. Deficit spending
• D. Trade restrictions

Answer: (B)

Inflation of paper money was a significant economic problem for the newly formed United States after the Revolutionary War. Following the war, many states and the Continental Congress issued paper currency to help finance the conflict and to support the economy. However, the excessive printing of this paper money led to a loss of confidence in its value, resulting in rampant inflation. As prices rose, the purchasing power of this currency drastically decreased, making it difficult for individuals and businesses to conduct transactions and settle debts. This situation was exacerbated by a lack of a solid economic framework or effective federal government ability to regulate the currency, which further destabilized the economy. The inability to maintain a stable currency undermined economic recovery and contributed to widespread dissatisfaction, demonstrating that managing currency effectively was a critical issue for the nascent United States.

Inflation of paper money was a significant economic problem for the newly formed United States after the Revolutionary War. Following the war, many states and the Continental Congress issued paper currency to help finance the conflict and to support the economy. However, the excessive printing of this paper money led to a loss of confidence in its value, resulting in rampant inflation. As prices rose, the purchasing power of this currency drastically decreased, making it difficult for individuals and businesses to conduct transactions and settle debts.

This situation was exacerbated by a lack of a solid economic framework or effective federal government ability to regulate the currency, which further destabilized the economy. The inability to maintain a stable currency undermined economic recovery and contributed to widespread dissatisfaction, demonstrating that managing currency effectively was a critical issue for the nascent United States.