Which of the following is the primary cause of inflation a a

Which of the following is the primary cause of inflation? a. an increase in unemployment b. an increase in government spending O c. an increase in productivity O d, an increase in the quantity of money

Solution

d) an increase in the quantity of money.

When quantity of money in the economy increases due to any reason like increase in government spending, decrease in taxation, decrease in interest rate on deposits, etc then holding of money by general public increases which leads to inflation in the economy.