Which of the following is likely to be inflationary
Answer Details
An increase in wages is likely to be inflationary. Inflation is an increase in the overall price level of goods and services in an economy over a period of time. When workers receive higher wages, they typically have more money to spend, which can increase demand for goods and services. This increased demand can lead to higher prices, which is a hallmark of inflation.
A taxes increase can also be inflationary as it decreases the amount of disposable income available to consumers and can lead to a decrease in demand for goods and services. An increase in unemployment can be deflationary as it decreases the amount of money in circulation and can lead to a decrease in demand and a decrease in prices. A budget surplus, where the government is spending less than it is collecting in revenue, can also be deflationary as it removes money from circulation.