How does consumer boom cause inflation?
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Explanation:
In an economy, when the demand for a commodity exceeds its supply, then the excess demand pushes the price up. On the other hand, when the factor prices increase, the cost of production rises too. This leads to an increase in the price level as well.
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Answer:
Booms also run the risk of high inflation. That happens when demand outstrips supply, allowing companies to raise prices. They are buoyed by better jobs, rising home prices, and a good return on their investments. As a result, they no longer need to delay major purchases.
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