Directions : In each question a sentence is given followed by a blank. You are provided with three fragments I, II and III. You have to identify which statement/statements can carry forward the given sentence in the most logical way so as to make the sentence coherent and contextually correct. However, this stimulation of the economy precipitates inflation and as inflation increases, ____________________ . I. the eco

Step-by-step solution

However, this stimulation of the economy precipitates inflation and as inflation increases, the economy goes into reverse and eventually there is a reduction in the money supply along with an increase in the interest rates. Statement I is correct. However, this stimulation of the economy precipitates inflation and as inflation increases, the number of donuts you can buy with the same amount of money will increase too. Statement II is incorrect as the amount of donuts would decrease with increase in inflation. Howev