Q1028
It has been generally viewed that when an economy grows beyond its potential growth rate, it causes inflation. How does growing faster than the potential rate cause inflation?
A.
Fast growth causes more productivity which leads to higher supply and cost put inflation
B.
Fast growth causes quick resources utilization to full fill the higher demand
AnswerC.
Fast growth causes more employment opportunities which leads to rise in prices
D.
None of these
Answer: Option B
Solution
Answer: Option B
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