Question

Typically, high inflation is a sign of

a healthy economy because it results from a fall in production costs.
a healthy economy because it results from a rise in consumer interest.
a struggling economy because wages cannot keep up with the increase in prices.
a struggling economy because it results from a fall in consumer interest.

Answer 1

a healthy economy because it results from a rise in consumer interest.

Explanation: High inflation often reflects demand‑pull inflation, where strong consumer spending and aggregate demand exceed the economy’s productive capacity. (Note: high inflation can also arise from supply shocks or poor monetary/fiscal policy, which may indicate problems.)