Which of the following statements is/are correct?
(1) High growth will lead to inflation.
(2) High growth will lead to deflation.
Select the correct answer using the codes given below.

Only 1

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Only 2

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Both 1 and 2

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Neither 1 nor 2

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Solution

The correct option is A Only 1
High economic growth stimulates demand as a result of rise in disposable income. The supply cannot match this increase in demand immediately and the prices of goods and services rise, leading to inflation.

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Similar questions

Q. With reference to inflation, which of the following statements is/are correct?

Select the correct answer using the code given below:

0

(f o f) (x) = f (x)

(g o g) (x) = g (x)

x = 0

(g o (f o g)) (x)

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