Which one of the following factors leads to the Agflation in an economy?

Inflation led by rises in the Black economy

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Deflation led by declines in agricultural commodity prices

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Inflation led by rises in agricultural commodity prices

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None of the above

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Solution

The correct option is C Inflation led by rises in agricultural commodity prices
Agflation is a condition wherein prices of agricultural commodities rises due to increase in demand for human consumption and as an alternative fuel. The term is formed from the combination of 'agriculture' and 'inflation'.

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