Download App

MONEY AND INFLATION — Economics STD 12 Commerce — Question

Gujarat BoardEnglish MediumSTD 12 CommerceEconomicsMONEY AND INFLATION5 Marks
Question
What are the effects of overpopulation on inflation?
✓

Answer

$1.$ Introduction:
  • In India there is $2\%$ annual increase in population, leads to inflation.
  • High population causes the increase in demand of basic needs and when the supply is insufficient the price level increases.
  • When the population is constant but their purchasing power increases due to rise of their income then there is an increase in price level.
$2.$ Effects of Over Population on Inflation:
$(1)$ Increase in Demand:
  • Increase in population leads to increase in demand of goods.
  • The demand for food, clothes and shelter also increases with the increasing population.
  • Other side socio-economic wants, education, transportation etc. are the basic necessities which increase the demand due to rise in population.
  • For giving all the above facilities and services to the people the public expenditure of government increases.
  • In short, due to rise in population the demand for the things like food grains, clothes, shelter, education, health, transport etc. keeps on rising.
  • If the scarcity prevails from the above goods then it lead to price rise.
$(2)$ Increase in supply:
  • By the rise in population it gives adverse effect on savings and investment and supply of goods and services.
  • If population rise then the income of individuals also increase, but to fulfill the demand for primary goods, their saving capacity decreases because
  • Per capita income does not rise due to increase in population and
  • Rise in population increase the unproductive population which decrease the savings.
  • Savings in the country is nil so investment behind economic development does not take place.
  • Old techniques of production are being followed instead of new techniques.
  • Production expenses are so high which creates the inflation.
$3.$ Conclusion:
  • In short, rise in population give rise to goods and services and on the other side it stops the supply of goods and services.
  • By this, demand and supply became imbalance and price level keeps on increasing that leads to inflation.
  • In general sense increase in population leads to inflation.
  • In other countries so many natural resources are available.
  • But due to low population it is less utilized while increase in population helps to utilize the unutilized natural resources which increase the production and supply.
  • In this condition, demand increases but price rise does not occur.
  • This helps in economical development.

Need a full question paper?

Generate a complete, print-ready paper with questions like this in minutes — across 16+ boards, with answer keys.

Start Generating Free

Explore more

More "5 Marks Each" from MONEY AND INFLATION→MONEY AND INFLATION — all question types→Economics STD 12 Commerce question papers→Gujarat Board STD 12 Commerce question papers→Gujarat Board question paper generator→

Similar questions

Draw a clustered bar diagram and analyze it, on the basis of given data.
Year $1981$ $1991$ $2001$ $2011$
Extent of Literacy in India $(\%)$ $44$ $52$ $65$ $74$
Extent of Literacy in Gujarat $M$ $45$ $61$ $69$ $79$
Instruction only for blind students :- From above data, write only analysis.
→
Discuss any five measures to reduce poverty in India.
→
Explain Structure of Industry.
→
Discuss steps of Indian government to develop industries.
→
Discuss various factors that look appear but cause inflation.
→
Discuss importance of industries in Indian economy $($Any five points$).$
→
Discuss steps of government to develop industries. $[$Any five$]$
→
What do you mean by literacy level?
→
Write a short note on Ipdian Railways and its role in India’s economic prosperity.
→
The following is a column showing ten years on the x-axis and the percentage of urban population on the $y-$axis.
Decades $1951$ $1961$ $1971$ $1981$ $1991$ $2001$
Urban population $($percentage of total population$)$ $17.29$ $17.97$ $19.91$ $23.34$ $25.70$ $27.81$
→