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GCE Economics 1990 Question 12

Question 12

Money and Inflation

Which of the following best explains an inflationary situation at current price level?

  1. A.Demand > Supply
  2. B.Demand < Supply
  3. C.Demand = Supply
  4. D.Demand/Supply
  5. E.Demand = Zero.
Show the answer and explanation

Answer: A (Demand > Supply)

Explanation

Inflationary pressure exists when demand at current prices exceeds supply, so prices are pushed up.