Economic booms can cause problems as well as create benefits because they are often accompanied by
A)deflationary pressures.
B)excessive labour-force participation.
C)inflationary pressures.
D)pressure on the government budget deficit to rise.
E)rising real interest rates.

Question

Quizplus · Accepted Answer

Economic booms often lead to a surge in demand for goods and services, which can drive up prices and result in inflationary pressures. This can be problematic for the economy as inflation erodes the purchasing power of money and increases the cost of borrowing, leading to higher interest rates. Additionally, inflation can lead to a decrease in international competitiveness and harm the overall growth prospects of the economy.

Economic Booms Can Cause Problems as Well as Create Benefits