Governments may contribute to inflationary pressure because of building up large ?
Correct answer: C. budget deficits
- A. numbers of employees
- B. welfare plans
- C. budget deficits
- D. expenditures
Explanation
A large budget deficit can raise aggregate demand when government spending exceeds revenue, creating demand-pull inflationary pressure, especially near full employment. Government employment or welfare spending alone does not necessarily produce inflation without a deficit or excess demand.
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