Question

India has been witnessing high rate of inflation because __________.

• A. public expenditure and money supply both are continuously increasing.
• B. the agricultural and industrial sectors have not performed adequately.
• C. both agricultural and administered prices have been hiked.
• D. all of the above.

Answer 1

The correct option is A public expenditure and money supply both are continuously increasing.

Since last two decades, the money supply in India is increasing due to development in the economy which increases the purchasing power of an individual due to which aggregate demand increases which leads to increase in public expenditure on consumption of goods and services.