A rise in general level of prices may be caused by 1. an increase in the money supply 2. a decrease in the aggregate level of output 3. an increase in the effective demand Select the correct answer using the codes given below.

1. A rise in the general level of prices is known as inflation. 2. Statement 1: An increase in the money supply, if not matched by a corresponding increase in the output of goods and services, can lead to inflation (too much money chasing too few goods). This is a key tenet of monetarist theory and a common cause of inflation. This statement is correct. 3. Statement 2: A decrease in the aggregate level of output (supply-side shock), with demand remaining the same or increasing, means fewer goods and services are available. This scarcity can drive up prices, leading to cost-push inflation or stagflation. This statement is correct. 4. Statement 3: An increase in the effective demand (total demand for goods and services in an economy at a given overall price level and a given time period), especially if it outpaces the economy's ability to produce (aggregate supply), will lead to demand-pull inflation. When demand exceeds supply, prices are bid up. This statement is correct. 5. Therefore, all three factors can cause a rise in the general level of prices.