Assuming that there is no excess aggregate demand, inflation can occur as a result of?
فرض کریں کہ مجموعی طلب میں کوئی زیادتی نہیں ہے، پھر بھی مہنگائی کس وجہ سے ہو سکتی ہے؟
- Wage increases exceeding productivity increases
- A rise in savings
- A balance of payments deficit
- None of these
Explanation
- Inflation usually occurs due to excess demand, but it can also happen without it.
- When production costs increase, firms raise prices even if demand is stable.
- A key cause is higher wages not matched by productivity growth.
- This increases cost of production and leads to cost-push inflation.
- Therefore, inflation can occur due to wage increases exceeding productivity.
Last verified on 23-04-2026
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