Inflation in an economy can be caused due to 1 Rising demand not accompanied by rising supply 2 Curr...........

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Inflation in an economy can be caused due to

1.Rising demand not accompanied by rising supply

2.Currency devaluation

3.Expansionary fiscal policy

4.Fall in unemployment rate

Select the correct answer using the code given below

1 only

1 and 3 only

2 and 4 only

1, 2, 3 and 4

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Explanation:

1, 2, 3 and 4

Rising demand not accompanied by rising supply (Option 1) can lead to inflation. When demand for goods and services exceeds supply, prices tend to rise.

Currency devaluation (Option 2) can also contribute to inflation by making imports more expensive, leading to higher prices for imported goods and services.

Expansionary fiscal policy (Option 3), which involves increased government spending and/or reduced taxes, can boost demand in the economy and potentially contribute to inflation if it outpaces the economy's capacity to produce goods and services.

A fall in the unemployment rate (Option 4) can also contribute to inflation. As more people find jobs and have income, demand for goods and services increases, potentially putting upward pressure on prices.

Therefore, options 1, 2, 3, and 4 are all correct.