ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The 5 causes of inflation are increase in wages, increase in the price of raw materials, increase in taxes, decline in productivity, increase in money supply. You can read about Inflation in Economy-Types of Inflation, Inflation Remedies, Effect of Inflation in the given link.

Detailed explanation-2: -Inflation is the rate at which the prices for goods and services increase. Inflation often affects the buying capacity of consumers. Most Central banks try to limit inflation in order to keep their respective economies functioning efficiently. There are certain advantages as well as disadvantages to inflation.

Detailed explanation-3: -Detailed Solution. The correct answer is Decreased money circulation helps in controlling the inflation. Inflation refers to the general increase in the prices of goods and services in an economy over a period of time.

Detailed explanation-4: -More jobs and higher wages increase household incomes and lead to a rise in consumer spending, further increasing aggregate demand and the scope for firms to increase the prices of their goods and services. When this happens across a large number of businesses and sectors, this leads to an increase in inflation.