Which of the following is likely to be inflationary

  • A taxes increase
  • B increase in unemployment
  • C budget surplus
  • D wages increase
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The correct answer is D. wages increase

An inflationary situation is likely to occur when wages increase.

When wages increase, workers have more income to spend. This can lead to an increase in demand for goods and services.

If the supply of these goods and services does not increase at the same rate as demand, prices can rise, leading to inflation

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