| Consider the following factors |
| 1. Deficit financing |
| 2. Black money in an economy |
| 3. High rate of population growth |
| Which of the factors given above are responsible for the Demand-Pull inflation in an economy? |
A) 1 and 2
B) 1 and 3
C) 2 and 3
D) All of these
Correct Answer: D
Solution :
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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