An economy heats up due to Demand deficit Excess supply High liquidity infusion Select the correct a...........

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An economy heats up due to

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1 and 2 only

2 only

3 only

2 and 3 only

Overheating of an economy occurs when its productive capacity is unable to keep pace with growing aggregate demand leading to inflation.

When there is excess demand and low supply, high consumption and low savings can lead to a situation where there is a shortage of investible capital.

The economy is unable to supply demanded goods and prices start increases.

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