Download App

Determination of Income and Employment — Economics STD 12 Humanities & Commerce — Question

Rajasthan BoardEnglish MediumSTD 12 Humanities & CommerceEconomicsDetermination of Income and Employment2 Marks
Question
Explain how increase in money supply causes inflation.
✓

Answer

Money is controlled by the Central Bank of the country as RBI in India. Increase in money supply by the Central Bank leads to increase in liquidity in the economy. Again, increased liquidity causes excess demand for goods and services and if the economy is already operating to its full potential, then it would end up causing inflation.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "2 Marks Question" from Determination of Income and Employment→Determination of Income and Employment — all question types→Economics STD 12 Humanities & Commerce question papers→Rajasthan Board STD 12 Humanities & Commerce question papers→Rajasthan Board question paper generator→

Similar questions

Suppose the demand for jeans increases. At the same time, because of an increase in the price of cotton, the supply of jeans decreases. How will it affect the price and quantity sold of jeans?
→
Giving reasons, identify which of the following are the subject matter of microeconomics or macroeconomics.
  1. National Income.
  2. Price determination of a commodity.
  3. General price level.
→
Giving reason comment on the shape of Production Possibilities curve based on the following schedule:
Good X(units)Good Y(units)
020
118
214
38
40
→
Explain any two main features of a centrally planned economy.
→
In which phase of Law of Variable Proportions a rational firm aims to operate?
→
State the meaning and properties of production possibilities frontier.
→
When price of a commodity falls by 50%, the quantity supplied decreases by 100%. Find out its price elasticity of supply.
→
  1. ‘Differentiated products’ feature of monopolistic competition.
→
If disposable income is ₹ 1000 and consumption expenditure is ₹ 750, find out average propensity to save.
→
In an economy, aggregate demand is greater than aggregate supply. Explain the changes that will take place in this economy.
→