Explanation:

There is no one definition for black money in economics. In layman’s language, it is money that has been acquired through illegitimate means or money which is unaccounted for, that is, for which tax is not paid to the government.

• A more exact definition of inflation is a situation of a sustained increase in the general price level in an economy. Inflation means an increase in the cost of living as the price of goods and services rise. The main causes of demand-pull inflation are:

• Growth in Black Money—Growth in unaccounted money leads to more demand for goods.

• Increase in Population—Increase in population raises the number of consumers in the market. This, in turn, raises demand for goods.

Higher rate of taxes has forced the earning part of the population for not paying taxes and keeping that part of income illegally with them which is later termed as black money. Tax evasion has led to the generation of a huge amount of black money in India. 

Hence option 1st is correct.