ECONOMICS
INFLATION
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
aggregate demand rises.
|
|
|
the average price of most goods and services rises.
|
|
|
the price of any given commodity rises.
|
|
|
the tax rate is lower than the government spending rate.
|
Detailed explanation-1: -Inflation is the general rise in the prices of goods and services in an economy, over a period of time. It reduces the purchasing power of consumers, because each unit of currency can purchase fewer products with an increase in the general price levels.
Detailed explanation-2: -Inflation occurs when the prices of goods and services increase over a long period of time, causing your purchasing power, or the amount of goods and services you can buy with a single unit of currency, to decrease.
Detailed explanation-3: -Inflation is a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.
Detailed explanation-4: -A sustained increase in the general price level represents the true definition of inflation and thus option (e) is the correct option.
Detailed explanation-5: -What is Inflation? Answer: Inflation is a situation when too much money is chasing too few goods and services in an economy. Hence, an imbalance exists between the GDP and the total money supply. As per Keynes, inflation is an imbalance between the aggregate demand and aggregate supply of goods and services.