An inflationary spiral can emerge when
A)Desired spending at full employment falls short of full-employment output.
B)An increase in investment exceeds available savings.
C)Actual investment equals desired investment.
D)Desired leakages exceed desired injections.

Question

Quizplus · Accepted Answer

An inflationary spiral can emerge when the increase in investment exceeds available savings. This can lead to an increase in demand for goods and services, which drives up prices. As prices increase, suppliers may increase production to take advantage of the higher prices, leading to further inflation. This can create a self-reinforcing cycle that can be difficult to break.

An Inflationary Spiral Can Emerge When