MONEY AND INFLATION — Economics STD 12 Commerce — Question
Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsMONEY AND INFLATION3 Marks
Question
Define inflation and explain it.
✓
Answer
Inflation:
Increase in the price level of goods or services over a period of time period is called inflation.
Inflation is an economic problem and a monetary phenomenon.
A layman thinks the increase in price levels is inflation, but one can understand it technically and properly only in terms of economics.
Definition:
$(A)$ Dr. A. P. Lerner’ definition: “The situation of excess demand over supply of goods is called inflation”.
$(B)$ Dr. J. M. Keynes definition: The real situation of inflation is created with the increase in money income beyond the level of full employment of factors of production.
$(C)$ Pigou’s definition:
“Inflation exists when money income increase faster than earning activity”.
The constant and steady increase in price leads to decrease in the purchasing power of money. Keynes believes that “Inflation is the rise in price levels even after full employment”.
Need a full question paper?
Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.