With reference to the Indian economy, which of the following factors can cause or increase demand-pull inflation?

Expansionary policies

Fiscal stimulus

Increased prices of raw materials

Higher purchasing power

Rising interest rates

Select the correct answer from the code given below.

Question

Demand-pull inflation arises when the demand for goods and services surpasses their supply. As overall demand in the economy rises, consumers are willing to pay higher prices, leading to a general increase in price levels. A robust economy with high consumer spending can result in excess demand, causing upward pressure on prices.
Cost-push inflation occurs due to rising production costs for goods and services. Factors contributing to this type of inflation include higher wages, increased prices of raw materials, and supply chain disruptions, all of which drive up the cost of production.

GKToday Admin · Accepted Answer

1, 2 and 4

Demand-pull inflation arises when the demand for goods and services surpasses their supply. As overall demand in the economy rises, consumers are willing to pay higher prices, leading to a general increase in price levels. A robust economy with high consumer spending can result in excess demand, causing upward pressure on prices.
Cost-push inflation occurs due to rising production costs for goods and services. Factors contributing to this type of inflation include higher wages, increased prices of raw materials, and supply chain disruptions, all of which drive up the cost of production.