Economics (AS & A Level) · Oct / Nov 2025 · Paper 34 · Question 15
9708The circular flow of income
What leads to an inflationary gap?
- AAggregate demand is greater than the maximum potential output of the economy.
- BInvestment increases at a greater rate than profits received by a firm.
- CThe economy is operating below its full capacity.
- DInnovation results in increased productivity in the economy.
As printed in the paper
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Correct answer: A. Aggregate demand is greater than the maximum potential output of the economy.
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