| A rise in general level of prices may be caused by |
| 1. An increase in the money supply. |
| 2. A decrease in the aggregate level of output. |
| 3. An increase in the effective demand. |
| Select the correct answer using the codes given below |
A) Only 1
B) 1 and 2
C) 2 and 3
D) All of these
Correct Answer: D
Solution :
[d] Inflation is defined as a sustained increase in the general level of prices for goods and services. It is measured as an annual percentage increase. As inflation rises, every dollar you own buys a smaller percentage of a good or service.
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