[Solved] Inflation occurs when aggregate supply is -

McqMate

Q.	Inflation occurs when aggregate supply is -
A.	more than aggregate demand
B.	less than aggregate demand
C.	equal to aggregate demand
D.	None of these
Answer» B. less than aggregate demand
Explanation: If the supply is less than the demand, the price will increase. Inflation, the persistent increase in the average price level, can be caused by an increase in aggregate demand or a decrease in aggregate supply. This suggests two basics sources, causes, or types of inflation—demand-pull inflation and costpush inflation. In general, prices increase as a result of market shortages, which occur when quantity demanded exceeds quantity supplied. Market shortages can be created by either increases in demand or decreases in supply. Translating thisto the macro-economy suggests that inflation occurs when aggregate demand exceeds aggregate supply.

3.8k

0

Do you find this helpful?

36

View all MCQs in

Discussion

No comments yet

Related MCQs

When aggregate supply exceeds aggregate demand -
The situation in which aggregate demand in the economy is growing at a rate reliable to lead to inflation is called:
The supply-side measure to control inflation is -
In a period of inflation and price rises the supply of money remains -
The process of curing inflation by reducing money supply is called -
The theory of macroeconomics which holds that increases in the money supply are a necessary and sufficient condition for inflation, is called
If the supply curve is a straight line passing through the origin, then the price elasticity of supply will be -
HDI is an aggregate measure of progress in which of the three dimensions?
Acording to Keynesian theory of income determination, at full employment, a fall in aggregate demand causes -
Aggregate net value of the output in one year is the -