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What factor on the demand side contributes to inflation when it increases at a rate faster than desired by increasing transactions?
  • a)
    Decrease in Public Expenditure.
  • b)
    Foreign Exchange Reserves.
  • c)
    Deficit Financing.
  • d)
    Increase in Money Supply.
Correct answer is option 'D'. Can you explain this answer?
Most Upvoted Answer
What factor on the demand side contributes to inflation when it increa...
An increase in the supply of money, especially when it outpaces the growth of transactions, can lead to inflation. In India, the continuous increase in the money supply has proven to be inflationary.
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