Which of the following can be a cause of inflation? (2021)
Practice Questions
Q1
Which of the following can be a cause of inflation? (2021)
Increased demand for goods
Decreased supply of goods
Increased production costs
All of the above
Questions & Step-by-Step Solutions
Which of the following can be a cause of inflation? (2021)
Step 1: Understand what inflation is. Inflation is when prices of goods and services increase over time.
Step 2: Identify the factors that can cause inflation. These include:
Step 3: Increased demand - When more people want to buy goods and services, prices can go up.
Step 4: Decreased supply - If there are fewer goods available, prices can also rise because people are competing to buy them.
Step 5: Increased production costs - If it costs more to make products (like higher wages or more expensive materials), companies may raise prices to cover those costs.
Step 6: Conclude that all these factors can contribute to inflation.
