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Economics (AS & A Level) · May / June 2021 · Paper 12 · Question 22

9708Price stability

What is correct about the causes of inflation?

  1. ACost-push inflation can be caused by a rising exchange rate.
  2. BCost-push inflation can be caused by lower indirect taxes.
  3. CDemand-pull inflation can be caused by a rising exchange rate.
  4. DDemand-pull inflation can be caused by lower direct taxes.

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Correct answer: D. Demand-pull inflation can be caused by lower direct taxes.

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