Suppose there is a scarcity of wheat in your town. What would be the effects of this situation?

Increase in the price of wheat

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Creation of black money

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Decrease in the price of wheat

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Smuggling of wheat

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Solution

The correct option is D Smuggling of wheat
Excessive government control and regulation leads to black money. The licence system restricts the growth of businesses, which is required to meet the needs of the people. This creates a scarcity of goods. And then people sell the goods at higher prices, creating black money. Some might even smuggle it from other countries.

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