1. High growth will lead to inflation. |
2. High growth will lead to deflation. |
A) Only 1
B) Only 2
C) Both 1 and 2
D) Neither 1 nor 2
Correct Answer: A
Solution :
Typically, higher inflation is caused by strong economic growth. If Aggregate demand in an economy expanded faster than aggregate supply, we would expect to see a higher inflation rate. If demand is rising faster than supply, then this suggests that economic growth is higher than the long run sustainable rate of growth.You need to login to perform this action.
You will be redirected in
3 sec