MONEY AND INFLATION — Economics STD 12 Commerce — Question
Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsMONEY AND INFLATION2 Marks
Question
Explain the statement "Too much money chasing too few goods causes inflation."
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Answer
This refers to Demand-Pull Inflation. When there is an excessive increase in the money supply, people's purchasing power increases. If the supply of goods cannot keep pace with this increased demand, prices rise, resulting in inflation.
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