When people want more goods and services than are available, the economy undergoes inflation. This statement best represents this economic concept:
A)Resources are scarce.
B)When markets don't achieve efficiency, government intervention can improve society's welfare.
C)Overall spending sometimes gets out of line with the economy's productive capacity.
D)Government policies can change spending.

Question

Quizplus · Accepted Answer

Inflation occurs when there is too much demand for goods and services relative to the economy's productive capacity. This causes prices to rise, as suppliers can charge more for their products since there are more people looking to buy them than there are goods to go around. This can happen when there is excessive spending, whether due to consumer demand, government policies, or other factors.

When People Want More Goods and Services Than Are Available