Inflation may occur if there is?

A. excess supply over demand
B. increase in productivity
C. excessive demand with limited supply
D. increased government spending in a depressed economy

Correct Answer: Option C

C. excessive demand with limited supply

Explanation

Excessive demand with limited supply:- it causes a rise in prices and increases inequalities: Generally, excess demand results in inflation (continuous rise in prices) without an increase in output and employment. people will be will to pay high prices for a few goods. which is generally what inflation is about. a fall in the purchasing power of money as more money will be chasing few goods