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Bleu200

A. Inflation.

Inflation occurs whenever a market starts to boom -- because people feel so confident about the market doing so well, prices and values begin to rise, often beyond what they are actually worth. This creates "bubbles", which is what eventually leads to recessions; those "bubbles" pop and prices and values plummet.

ayfat23

The correct answer is A. Inflation.

    Economic growth can be regarded as  rise in production of economic goods as well as services, which is usually compared from a particular period of time to  another.

     Economic growth can be measured using  nominal or real term Traditionally, a nation can measure aggregate economic growth  in terms of gross domestic product (GDP),

Economic growth can result in inflation bin some of the cases such as;

  • Fast rising of demand, will result in firms increasing  supply, as a result of this  firms will put up prices as  respond to the excess demand as well as  supply.
  • When there is  rapid growth, there will be more employment for workers then unemployment will fall, and that may difficult for firms to fill available job vacancies, then wages might go up as as result of  shortage of labour
  • Increase in wages will make firms cost to go up, and definitely the firm will pass the cost  to consumers.
  • As wages rises there would be disposable income to spend by workers hence, further increase in aggregate demand.

      Therefore, when there is rapid economic growth upward pressure is experienced on  prices as well as  wages then result to inflation.

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