Economics 2281 · O Level · Inflation and deflation

Inflation and deflation — practice question

Under what circumstances would a rise in aggregate demand be least likely to cause inflation in an economy?

  • Awhen it is the result of an increase in government expenditure
  • Bwhen it is the result of an increase in expenditure on consumer goods
  • Cwhen there are substantial unemployed resources in the economy
  • Dwhen there is a substantial increase in expenditure on imports

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