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The correct answer is: C. Both 1 and 2<\/strong><\/p>\n Expansion of credit increases inflation because it increases the amount of money in circulation. When there is more money in circulation, people have more money to spend, which drives up prices.<\/p>\n Inflation can lead to a favorable trade surplus if it makes a country’s exports more competitive. When prices in a country are rising faster than prices in other countries, it makes it more attractive for foreign buyers to purchase goods from that country. This can lead to an increase in exports and a decrease in imports, which can result in a trade surplus.<\/p>\n However, it is important to note that inflation can also have negative consequences, such as making it more difficult for people to afford goods and services, and reducing the value of savings.<\/p>\n","protected":false},"excerpt":{"rendered":" [amp_mcq option1=”Only 1″ option2=”Only 2″ option3=”Both 1 and 2″ option4=”Neither 1 nor 2″ correct=”option3″]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-50004","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"\n