Question : Inflation is caused by
Option 1: Increase in money supply and decrease in production
Option 2: increase in money supply
Option 3: increase in production
Option 4: decrease in prodution
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Correct Answer: Increase in money supply and decrease in production
Solution : Correct Answer: Increase in money supply and decrease in production
It is an unavoidable phenomenon as an economy grows. When inflation surpasses the typical rate, it is harmful to the economy.Production bottlenecks also result in a lack of supply, which eventually leads to inflation.The government and the RBI take initiatives to keep inflation in check in order to ensure economic stability and growth.
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