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Current Affairs·Easy

Which of the following factors is/are said to increase general price levels in an economy? 1. Increase in population 2. Consumerism 3. Increase in money supply Select the correct answer using the code given below:

Which of the following factors is/are said to increase general price levels in an economy?

1. Increase in population

2. Consumerism

3. Increase in money supply

Select the correct answer using the code given below:

Options

  1. a.

    2 and 3 only

  2. b.

    1 and 2 only

  3. c.

    3 only

  4. d.

    1, 2 and 3

    Correct answer

Explanation

• Increase in general prices is commonly referred to as inflation.

• Increase in population results in increase in demand, thereby increasing the price levels in the economy.

• In a culture of consumerism, people spend more money than savings. This is said to be inflationary in nature.

• When there is increased supply of money, too much money is trying to purchase too few good. Thus, the price levels of the goods increase.

• An appreciating Rupee makes imports costlier, thus inducing ‘imported inflation’.

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