ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Which of the following is a possible cause of demand-pull inflation?
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an increase in government expenditure
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an increase in the price of oil
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a rise in wages
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a rise in imports
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Explanation:
Detailed explanation-1: -Demand-pull inflation can be caused by an expanding economy, increased government spending, or overseas growth.
Detailed explanation-2: -This type of inflation is caused due to an increase in aggregate demand in the economy.
Detailed explanation-3: -Demand-pull inflation is mainly caused due to:-Increased borrowing. Due to fiscal stimulus-It includes increased government consumption or lowering of taxes. Hence 2 is correct.
Detailed explanation-4: -An outward shift in aggregate supply.
Detailed explanation-5: -A mismatch between demand and supply. When demand exceeds supply. Increase in money supply and fall in production. Due to changes in demand-side or supply-side or both. 20-Dec-2022
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