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When too much money chases too few goods, the resulting inflation is called :
- a)Deflation
- b)Demand-pull Inflation
- c)Cost push inflation
- d)Stagflation
Correct answer is option 'B'. Can you explain this answer?
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Verified Answer
When too much money chases too few goods, the resulting inflation is c...
Demand-pull inflation is asserted to arise when aggregate demand in an economy outpaces aggregate supply. It involves inflation rising as real gross domestic product rises and unemployment falls, as the economy moves along the Phillips curve. This is commonly described as "too much money chasing too few goods."
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When too much money chases too few goods, the resulting inflation is c...
Explanation:
- Demand-pull inflation occurs when there is too much money chasing too few goods and services.
- When the demand for goods and services increases, it causes prices to rise because there are not enough goods and services to meet the demand.
- This type of inflation is usually caused by an increase in consumer spending, government spending, or investment.
- When demand is greater than supply, businesses can raise prices, which leads to inflation.
- Demand-pull inflation is characterized by an increase in the general price level of goods and services in an economy.
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When too much money chases too few goods, the resulting inflation is called :a)Deflationb)Demand-pull Inflationc)Cost push inflationd)StagflationCorrect answer is option 'B'. Can you explain this answer?
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