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.
1 only
1 and 2 only
2 and 3 only
1, 2 and 3
Answer is Right!
Answer is Wrong!
This question was previously asked in
UPSC IAS – 2013
2. A decrease in the aggregate level of output, with demand remaining constant or increasing, creates scarcity relative to demand, leading to cost-push or supply-side inflation.
3. An increase in effective demand (aggregate demand) that exceeds the available supply leads to demand-pull inflation.