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    Question

    Which the following is not the reason for demand pull

    inflation?
    A Increase in export demand Correct Answer Incorrect Answer
    B Increase in money supply Correct Answer Incorrect Answer
    C Increase in govt spending Correct Answer Incorrect Answer
    D Increase in administered price Correct Answer Incorrect Answer
    E None of these Correct Answer Incorrect Answer

    Solution

    An administered price is the price of a good or service as dictated by government or central authority as opposed to buyers and sellers interacting according to supply and demand. So inflation is not because of demand. Stagflation ·         When an economy faces double issues of high inflation & high unemployment simultaneously, it is termed as stagflation. ·         Example- US Economy experienced such inflation in 1970s. ·         This type of inflation falsify the conventional that exists a trade off between inflation & unemployment (expressed by Phillips Curve).

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