A-LevelEconomicsThe macroeconomy9708/12 · May/June 2017 · Q211 Mark
Which combination of events is most likely to cause inflation? [Figure 21.1]
Afalling exchange rate, falling direct taxes, falling money supply
Bfalling exchange rate, falling direct taxes, rising money supply
Crising exchange rate, rising direct taxes, rising money supply
Drising exchange rate, rising direct taxes, falling money supply
✓ Correct answer
B: falling exchange rate, falling direct taxes, rising money supply
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