SSC Economics Sample Paper NCERT Sample Paper-4

  • question_answer
    Which one of the following is riot a factor causing Demand pull inflation?

    A)  Deficit spending by the Government

    B)  Increase in incomes

    C)  Rapid growth of population

    D)  Increase in money wages

    Correct Answer: D

    Solution :

    [d] A term used in Keynesian economics to describe the scenario that occurs when price levels rise because of an imbalance in the aggregate supply and demand. When the aggregate demand in an economy strongly outweighs the aggregate supply, prices increase. Economists will often say that demand-pull inflation is a result of too much money chasing too few goods. This type of inflation is a result of strong consumer demand. When many individuals are trying to purchase the same good, the price will inevitably increase. When this happens across the entire economy for all goods, it is known as demand-pull inflation.

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