Multiple choice general knowledge

Inflation occurs when aggregate supply is..

  1. More than aggregate demand

  2. Less than aggregate demand

  3. Equal to aggregate demand

  4. None of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Inflation occurs when aggregate demand exceeds aggregate supply in an economy. When demand outpaces supply, prices rise as too much money chases too few goods, leading to sustained inflationary pressure in the economy.

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