C. 43 – 46 題            Inflation, a term that is ubiquitous in economics, refers to the rate at which the general level ofprices for goods and services is increasing, resulting in the concurrent decline of the purchasing powerof currency. Typically, inflation is expressed as a percentage increase over a specified period, usuallyone year.              One of the main reasons for inflation is the escalation of the money supply. When the centralbank creates more money, the money supply expands, leading to the devaluation of each unit ofcurrency. The resultant effect is that as more money chases the same quantity of goods and services,prices escalate, which is known as the cost-push inflation. Another factor that drives inflation is thesurge in the demand for goods and services. When demand supersedes supply, prices rise, aphenomenon referred to as demand-pull inflation.               Inflation has profound effects on the economy. One of the most significant consequences is thereduction of the purchasing power of money. As prices increase, people require more money to buythe same amount of goods and services, leading to a decline in consumer confidence, sluggisheconomic growth, and elevated unemployment rates.               Inflation also impacts interest rates. When inflation is high, the central bank raises interest ratesto reduce the money supply and control inflation. This often leads to reduced borrowing andinvestment, thereby impeding economic growth.               Furthermore, inflation can affect the exchange rate of a country’s currency. As inflation surges,the currency value declines, rendering exports cheaper and imports more expensive. Consequently,this can lead to a decrease in the trade balance, which can also impact economic growth.               Central banks employ a variety of tools to combat inflation, including adjusting interest rates,controlling the money supply, and using fiscal policies such as taxation and government spending.However, taming inflation is a delicate balancing act, as measures taken to reduce inflation can alsolead to a slowdown in economic growth.
【題組】43. What is demand-pull inflation?
(A) An increase in the money supply.
(B) A decrease in the money supply.
(C) An increase in demand for goods and services.
(D) An increase in taxes.