Typically, high inflation is a sign of
a. a healthy economy because it results from a fall in production costs.
b. a healthy economy because it results from a rise in consumer interest.
c. a struggling economy because it results from a rise in production costs.
d. a struggling economy because it results from a fall in consumer interest.

c). a struggling economy because it results from a rise in production costs.

Explanation:

High inflation refers to the rapid increase in the price of goods and services in the economy. When price of all the goods increase at a high rate, then it is termed as inflation. It leads to a rise in production cost as workers demand higher wages which will result in increase in the cost of production.

Thus, the correct option is a struggling economy because it results from a rise in production costs.

High Inflation is the sign of a struggling economy because it results from a rise in production costs. It results in a decrease in the purchasing power of the consumer.

Further Explanation:

Inflation: Inflation refers to the situation when the prices of goods and services rise above the general level over a period of time continuously.

The inflation can be classified into the following categories:

•Demand-pull Inflation: It occurs when the demand for services and goods in an economy exceeds its production capacity or supply. The higher prices of goods and services are the outcome of difference between demand and supply.

•Cost-push Inflation: It occurs when the price of production input increases which result in an increase in prices of goods and services.

High inflation rate:

The high inflation rate has an adverse impact on the economy because it results in unemployment, reduces the purchasing power, and affects the balance of payment by making the export from the country expensive.

Therefore, option (c) is correct because the high inflation adversely impacts the economy and is due to an increase in production cost.

Learn more:

1. Demand and supply diagram

2. Demand curve

3 Forecasting human resources supply

Answer details:

Grade: Middle School

Subject: Economics

Chapter: Demand and Market

Keywords: High Inflation, Inflation, Healthy Economy, Struggling Economy, Production Cost, Consumer Interest, Demand-pull inflation, cost-push inflation, rise in production cost, fall in consumer interest, fall in production cost, resource management, rise in consumer interest.

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