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.

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CollectorBabu · Accepted Answer

Correct Answer: 1, 2 and 3. It is seen that factors which contribute to rise in price level result from the rapid growth of population, increase in incomes, increasing non-development government expenses and increase in money supply, shows statement 1 and 3 are correct. Further, it is noticed that a sudden change in price may be caused by an increase or decrease in the supply of goods, which indicates that statement 2 is correct. As all three statements lead to either increase in demand for goods and services or decrease in the supply, thereby pushing up the prices. Hence, the correct option is D.

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.

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