The correct answer is: B. Fast growth causes quick resources utilization to full fill the higher demand.
When an economy grows beyond its potential growth rate, it means that the economy is producing more goods and services than it can normally produce. This can lead to inflation because it puts upward pressure on prices. When there is more demand for goods and services than there is supply, prices tend to rise. This is because businesses can charge more for their products and services without losing customers.
Inflation can also be caused by an increase in the money supply. When the government prints more money, it increases the amount of money in circulation. This can lead to inflation because people have more money to spend, which drives up demand.
However, inflation can also be caused by a decrease in the supply of goods and services. This can happen when there is a natural disaster, a war, or a government policy that restricts production. When there is less supply of goods and services, prices tend to rise.
In conclusion, inflation can be caused by a number of factors, including economic growth, an increase in the money supply, and a decrease in the supply of goods and services.
Here is a brief explanation of each option:
- Option A: Fast growth causes more productivity which leads to higher supply and cost put inflation. This is not always the case. For example, if an economy grows because of an increase in the money supply, this will not necessarily lead to higher productivity. In fact, it could lead to lower productivity if businesses are not able to use the extra money efficiently.
- Option B: Fast growth causes quick resources utilization to full fill the higher demand. This is the most likely cause of inflation when an economy grows beyond its potential growth rate. When there is more demand for goods and services than there is supply, prices tend to rise.
- Option C: Fast growth causes more employment opportunities which leads to rise in prices. This is not always the case. For example, if an economy grows because of an increase in the money supply, this will not necessarily lead to more employment opportunities. In fact, it could lead to lower employment if businesses are not able to find enough workers to fill the extra jobs.
- Option D: None of these. This is not the correct answer.