Question on: WAEC Economics - 2015
Inflation may occur if there is?
A
excess supply over demand
B
increase in productivity
C
excessive demand with limited supply
D
increased government spending in a depressed economy
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Correct Option: C
excessive demand with limited supply; it causes rise in prices and increases in equalities: Generally, excess demand results in inflation (continuous rise in prices) without increase in output and employment. people will be will to pay high prices for few goods. which is generally what in flation is about. a fall in the purchasing power of money as more money will be chasing few goods
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