Multiple choice

The cause of inflation is

  1. increase in money supply

  2. fall in production

  3. increase in money supply and fall in production

  4. decrease in money supply and fall in production
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Inflation is generally caused by an increase in the money supply (too much money chasing too few goods) or a decrease in the supply of goods (fall in production), leading to higher prices.

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