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Economics › Inflation
Consider the following statements : 1. Inflation benefits the debtors. 2. Inflation benefits the bond-holders.
Which of the statements given above is/are correct?
(a)
1 only
(b)
2 only
(c)
Both 1 and 2
(d)
Neither 1 nor 2
(A)
A rise in general level of prices may be caused by 1. an increase in the money supply 2. a decrease in the aggregate level of output 3. an increase in the effective demand Select the correct answer using the codes given below.
1 and 2 only
2 and 3 only
1, 2 and 3
(D)
Which one of the following is likely to be the most inflationary in its effect?
Repayment of public debt
Borrowing from the public to finance a budget deficit
Borrowing from banks to finance a budget deficit
Creating new money to finance a budget deficit