Question

What are the causes of inflation?​

Answer 1

Answer:

If the demand for a commodity exceeds its supply, then the excess demand increases the price of the commodity. Also, if the price of the factors of production increases, the price of the commodity increases too. The common causes that led to inflation are:

• Primary Causes

• Increase in Public Spending

• Deficit Financing

• Increased Velocity of Circulation

• Population Growth

• Hoarding

• Genuine Shortage

• Exports

• Tax Reduction

• Imposition of Indirect Taxes

• Price-rise in the International Markets

• Non-economic Reasons

Answer 2

Explanation:

Inflation is a measure of the rate of rising prices of goods and services in an economy. Inflation can occur when prices rise due to increases in production costs, such as raw materials and wages. A surge in demand for products and services can cause inflation as consumers are willing to pay more for the product.