GENERAL KNOWLEDGE

Detailed explanation-1: -Economic growth results in higher disposable income available with the consumers which increases the overall demand along with the supply available for the consumers. This increase in demand spurs inflation, which eventually becomes a necessary evil for a growing economy.

Detailed explanation-2: -According to this theory, the individuals in the future will receive the return on investment in the form of money. Thus, investment and real money balances will be reduced by inflation. Consequently, inflation will negatively affect economic growth.

Detailed explanation-3: -Economic growth – measured as an increase of people’s real income – means that the ratio between people’s income and the prices of what they can buy is increasing: goods and services become more affordable, people become less poor.