Multiple choice

When too much money is chasing too few goods, the situation is

  1. Deflation

  2. Inflation

  3. Recession

  4. Stagflation

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When too much money is chasing too few goods, it creates demand-pull inflation, where prices rise because demand exceeds supply. This is a classic definition of inflation in economic terms. Deflation is the opposite, recession is economic decline, and stagflation combines inflation with stagnation.