Which of the following is a cause of demand-pull inflation?
A. Rise in wages independent of productivity
B. Increase in the cost of raw materials
C. Supply chain disruptions
D. Increase in money supply and aggregate demand
Answer: Option D
Solution (By JKSSB Mock Tests)
Demand-pull inflation arises when aggregate demand exceeds aggregate supply at full employment, often due to excess money supply or expansionary fiscal policy.
Explanation:
The foundational economy comprises the everyday goods and services—utilities, food, health, education, care—that are essential for civilised life and are often most effectively provided through collective arrangements.
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