Which of the following statements about the causes of inflation in the price of goods and

services based on the material covered in the lecture are TRUE:

1. A Neo-Keynesian economist would argue that a key cause is that aggregate demand

(expenditure) for goods and services is growing at a faster rate than the aggregate

supply (production) of those goods and services.

2. A Neo-Classical economist would argue that a key cause is that the growth in the

money supply (including credit) is growing at a faster rate than the level of

production of goods and services.

Neither of the statements are true (both are false)

Only statement 1 is true

Only statement 2 is true

Both statements are true (neither are false)