Basics of economics

Basics of economics

Multiple Choice

Inflation means

• general increase in the price level

• increase in the real wage

• increase the value of money

• none of the above

Inflation

• ž inflation is a sustained increase in the general price level of goods and services in an economy over a period of time

  žInflation percentage = P1-P ÷ P

  žReasons

  žCost push, Demand pull

  žDemand Pull Factors

  žRise in population.

  žBlack money.

  žRise in income.

  žExcessive government expenditure.

  
  

  
  

Cost Push Factors

• 
  

  žInfrastructure bottlenecks which lead rise in production and distribution costs.

  žRise in Minimum Support Price (MSP).

  žRise in international prices.

  žHoarding and black marketing.

  žRise in indirect taxes.

  
  

  
  

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