Demand factors for inflation are/is?
Demand factors for inflation are/is?
The correct option is C All of above
Inflation is an economic situation where the general price level
in the economy for all the relevant goods has a constant appreciable rise over
a considerable period of time. The demand factors of inflation are as follows:
(i)
Increase in public expenditure: If public expenditure increases then the demand
for all the goods and services in the economy will increase with no change in
supply which will lead to excess demand and result in inflation.
(ii) Deficit financing: Deficit financing means filling
the gap between government revenue and government expenditure in a government
budget either by borrowing funds from central bank or by printing currency. In
both the ways there is increase in the money supply in the economy which leads
to inflation.
(iii) Growth of population at a rapid pace: If population increases at a rapid pace, initially the aggregate demand in the economy will increase at a rapid pace with very slight increase in the aggregate supply, which leads to
excess demand in the economy due to which the prices for all goods and services
increase which leads to rise in the general price level.
Inflation is an economic situation where the general price level in the economy for all the relevant goods has a constant appreciable rise over a considerable period of time. The demand factors of inflation are as follows:
(i) Increase in public expenditure: If public expenditure increases then the demand for all the goods and services in the economy will increase with no change in supply which will lead to excess demand and result in inflation.
(ii) Deficit financing: Deficit financing means filling the gap between government revenue and government expenditure in a government budget either by borrowing funds from central bank or by printing currency. In both the ways there is increase in the money supply in the economy which leads to inflation.
(iii) Growth of population at a rapid pace: If population increases at a rapid pace, initially the aggregate demand in the economy will increase at a rapid pace with very slight increase in the aggregate supply, which leads to excess demand in the economy due to which the prices for all goods and services increase which leads to rise in the general price level.
