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What is meant by inflation? Explain it. |
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Answer» In Economics, the constant rise in prices is called inflation. In the words of Shapiro, “Inflation is a continuous and extreme rise in general price level.” According to Crowther, “Inflation is a state in which the value of money is falling, i.e., prices are rising.” From the above definitions, it is clear that inflation is a process of continuous rise in prices and hence fall in the value of money. There are various causes of inflation. But the main cause of inflation is the excess of demand over supply. When the demand for goods exceeds the supply of goods, prices start rising and hence the problem of inflation arises. |
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