Multiple choice

The cause of inflation is?

  1. Increase in money supply and fall in production

  2. Decrease in money supply and fall in production

  3. Increase in money supply and increase in production

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Inflation is generally defined as a situation where there is too much money chasing too few goods. An increase in money supply combined with a decrease in production leads to rising price levels.

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