Question

Which type of inflation does appear in an economy when money supply exceeds the available goods and services?

Answer 1

Heya....

See here for your answer....

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When the money supply exceed to the available goods and services it leads to.......
PRICE SPIRAL INFLATION....

Means....

The money supply is increasing in the economy , thus it leads to rise in purchasing power of the consumers...

It creates high demand for goods that increase the prices of each commodity....

Then, low level of income users also demand to raise in their income , it again increase the input cost in commodity...

So prices remains high even when money supply being in balance..

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Answer 2

Price spiral inflation appears in the economy when the supply exceeds the available goods and services.

Explanation:

• Due to the price spiral inflation, there is an increase in the disposable income, that raises the demand for goods and causing the prices to rise Inflation exists when money supply goes up in comparison to the available goods and services.  

• Inflation can also be because of budget deficit financing. There is more money in the economy for the same number of goods.  

• Therefore this increase in monetary demand prompts the enterprises to raise the prices of goods and services.  

Learn more about Price spiral inflation

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