"black money is a cause of inflation." explain
Answers
Answer:
Inflation is basically a rise in prices.
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:
1. Growth in Black Money—Growth in unaccounted money leads to more demand for goods.
2. Increase in Population—Increase in population raises the number of consumers in the market.
This, in turn, raises demand for goods.
3. Increase in Money Supply—Increase in money supply by the RBI raises the money in circulation, which in turn raises demand for goods.
4. Increase in Disposable Income of the Consumer—When the common man has more money at his disposal, he will demand more goods.
"Black Money is a cause of Inflation"
Basically, inflation is the rise in the price of the commodity that means the value of the money is very low. If I explain this in simple word inflation means the presence of money in the market but not the services and commodities.
Inflation occurs when the demand and the product cost of the product or services increases. Which affect the average wages people who can't afford the services in the same amount from which they are availing it earlier.
There are so many causes of inflation:
- Black Money
- High Production Cost
- High Demand
- Lack of services
Black Money means people have currency but the government has not any record of it. So they use it to get the services of that money ultimately the demand will get increase and we all know that when the demand increases the price of the product or the service will increase and that is the inflation only.