|Which of the following statements is/are correct?|
|1. High growth will lead to inflation.|
|2. High growth will lead to deflation.|
|Select the correct answer using the codes given below|
A) Only 1
B) Only 2
C) Both 1 and 2
D) neither 1 nor 2
Correct Answer: A
Solution :Typically, higher inflation is caused by strong economic growth. If Aggregate Demand in an economy expanded faster than aggregate supply, we would expect to see a higher inflation rate. If demand is rising faster than supply this suggests that economic growth is higher than the long run sustainable rate of growth.
You need to login to perform this action.
You will be redirected in 3 sec