Multiple choice general knowledge

Inflation occurs when aggregate supply is

  1. More that 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 supply is less than demand, prices rise as too much money chases too few goods. This demand-pull inflation happens when consumers and businesses want to buy more than the economy can produce, creating upward pressure on prices.

Keep practicing — related questions