| A rise in general level of prices may be caused by |
| 1. an increase in the money supply |
| 2. a decrease in the aggregate level of output. |
| 3. an increase in the effective demand. |
| Select the correct answer using the codes given below. |
A) Only 1
B) 1 and 2
C) 2 and 3
D) All of these
Correct Answer: D
Solution :
Exp. [d] Rise or fall in prices is caused due to changes in supply and demand. An increase in the money supply increases the demand and thus, increases prices. A decrease in the aggregate level of output will reduce supply and thus prices increase again. An increase in effective demand would again raise up the prices. Thus, all three events will raise the prices.
You need to login to perform this action.
You will be redirected in
3 sec
