PRICE RISE AND CONSUMER AWARENESS. — Social Science STD 10 — Question
Gujarat BoardEnglish MediumSTD 10Social SciencePRICE RISE AND CONSUMER AWARENESS.4 Marks
Question
Discuss the reason for price rise in detail.
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Answer
The reasons for the price rise are as follows: $(i)$ Increase in the supply of money in the economy takes place whenthe government resorts to deficit financing and prints new currency.Increase in cash transactions in the market. Additional money made available by reducing the rate of interest on the loans.
The increase in the public expenditure, Expenditure on defence unplanned expenditure, expenditure on welfare scheme lead “to increase in supply of money in the market.’ The increase in supply of money increases the purchasing power of the people. However, the supply of the goods and services do not increase to the extent of demand. This imbalance between the demand and supply results in the price rise.
$(ii)$ Population growth: Population of India has increased from $102.70$ crore in $2001$ to $121.02$ crore in $2011$. Additional population means additional demand for goods and services. The imbalance between demand and supply results in the price rise.
$(iii)$ Increase in export: The encouragement given by the government has considerably increased export of the Indian goods. Thereby the availability of the goods in the domestic market has decreased. This results in the shortage/scarcity of goods and increase in price.
$(iv)$ Shortage of raw material: The shortage of raw material leads to increase in the prices of their products. This contributes to price rise in the market.
$(v)$ Price rise by the government: Petroleum products are imported by the international market find reflection in the increase of the prices of the petroleum products by the government. The government fixes support prices for the agricultural produce. Any increase in the support prices by the government contributes to the price rise.
$(vi)$ Natural calamities: The natural calamities like excess rainfall, scanty rainfall, earthquakes, floods and epidemics adversely affect the production and supply of the agricultural products. This shortage in supply results in price rise.
$(vii)$ Man-made disasters: The disasters like war, riots, strikes, lockouts and industrial unrest adversely affect the supply of essential commodities and trigger price rise.
$(viii)$ Anti-Social activities: Black money, smuggling, hoarding and black marketing are anti-social activities. Hoarding of the goods creates artificial shortage and these goods are sold in the black market at higher price than their normal price.
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