Ayushi posted an Question
September 09, 2020 • 16:47 pm 30 points
  • UGC NET
  • Economics

Inflation takes place due to which of the following: 1. increase in costs 2. excess production 3. excess money supply 4. demand- pull causes

Inflation takes place due to which of the following: 1. Increase in costs 2. Excess production 3. Excess money supply 4. Demand- pull causes

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    Nidhi taparia Best Answer

    There are three correct options among these four. Inflation can be cost push (or when costs rise) and demand pull (when demand > supply, pushing prices upwards). Excess money supply is one of the demand pull causes for inflation. When there is more money in the hands od people, they spend it much more on commodities and increase demand. Excess production causes demand < supply which causes disinflation and not inflation.

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