MONEY AND INFLATION — Economics STD 12 Commerce — Question
Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsMONEY AND INFLATION3 Marks
Question
Explain the increase in demand as a cause of inflation.
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Answer
Increase in demand:
If the demand of a product rises, its price rises. Similarly, when the demand increases and the supply is lesser than the demand even then price rises.
In economics if inflation takes place due to increase in demand compared to supply then such inflation is called ‘Demand-pull inflation’. The major reasons for increase in demand are following are discussed below.
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