SSC Economics Sample Paper NCERT Sample Paper-2

  • question_answer
    Which of the following statements is/are correct?
    1. High growth will lead to inflation.
    2. High growth will lead to deflation.
    Select the correct answer using the codes given below

    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 this suggests that economic growth is higher than the long run sustainable rate of growth.

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