Question on: JAMB Economics - 1994

Inflation in an economy like Nigeria's is often fueled by increases in government expenditure. Here's why:

• Increased Government Spending: When the government spends more money, it injects more currency into the economy. If the supply of goods and services does not increase at the same rate, this increased money supply leads to higher demand, potentially driving up prices (inflation).
• Other Options:
  • A. The dollar price of crude oil: While fluctuations in oil prices can impact the economy and potentially contribute to cost-push inflation, it's not a direct driver of inflation in the way government spending is.
  • B. The sale of company shares: The sale of company shares primarily affects the financial market and does not directly cause inflation.
  • **D