The cause of inflation is ?
Correct answer: C. Increase in money supply and fall in production
- A. Increase in money supply
- B. Fall in production
- C. Increase in money supply and fall in production
- D. Decrease in money supply and fall in production
Explanation
Inflation can result from too much money chasing goods, from reduced production, or from both together. An increase in money supply combined with a fall in output creates especially strong upward pressure on prices.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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