Multiple Choice Questions on With reference to recent rise in inflation consider the following statements Failed monsoons and the........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

With reference to recent rise in inflation consider the following statements Failed monsoons and the...........

Economic Affairs Inflation
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    With reference to recent rise in inflation, consider the following statements

    1. Failed monsoons and the resultant drop in agricultural productivity
    2. Increase in government expenditure
    3. Increase in administered prices of MSP
    4. Circulation of black money

    Which of the options above denote cost-push factors of inflation?

    1&2 only

    Incorrect Answer

    2&4 only

    Incorrect Answer

    1&3 only

    Correct Answer

    All of the above

    Incorrect Answer
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    Explanation:

    Demand pull factors of inflation

    • Black Money 
    • Increased government expenditure 
    • Changing consumption patterns 
    • Rising population 

    Cost push factors

    • Increase in indirect taxes also leads to cost side inflation. 
    • Increase in administered prices such as the MSP (Minimum Support Price) for the food grains, petroleum products, etc 
    • Infrastructural bottlenecks 
    • Failed monsoons and the resultant drop in agricultural productivity 

    Hence option 3rd is correct.

    By: Shubham Tiwari
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