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A-LevelEconomicsThe macroeconomy9708/12 · May/June 2021 · Q221 Mark

What is correct about the causes of inflation?

ACost-push inflation can be caused by a rising exchange rate.
BCost-push inflation can be caused by lower indirect taxes.
CDemand-pull inflation can be caused by a rising exchange rate.
DDemand-pull inflation can be caused by lower direct taxes.

✓ Correct answer

D: Demand-pull inflation can be caused by lower direct taxes.

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About this question

Topic
The macroeconomy, A-Level Economics (syllabus 9708). Multiple choice, 1 mark.
Source
A-Level Economics, May/June 2021 Paper 1 Variant 2, question 22.

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