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UPSC 2013: A rise in general level of prices may be caused by 1. an increase in the money supply 2. a decrease in the aggregate level of output 3. an increase in the effective demand Select the correct answer using the codes given below.
(a)1 only
(b)1 and 2 only
(c)2 and 3 only
(d)1, 2 and 3
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Not attemptedCorrect Answer: (d) 1, 2 and 3
Inflation can arise when (1) the money supply expands-demand-pull inflation, (2) aggregate output falls so fewer goods chase the same money—supply-side (cost-push) inflation, and (3) effective (aggregate) demand rises faster than supply. All three listed factors can therefore raise the general price level, making option (d) correct. ([edukemy.com](https://edukemy.com/blog/upsc-prelims-2013-question-32/?utm_source=openai))
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Frequently Asked Questions
What is the correct answer to this UPSC 2013 Indian Economy question?▼
The correct answer is option (d): 1, 2 and 3. Watch the detailed video explanation in our Sherlocking Prelims course on UnlockIAS.
Which year was this Inflation & Price Indices question asked in UPSC Prelims?▼
This question was asked in UPSC CSE Prelims 2013, GS Paper 1, as Question 82. It falls under Indian Economy > Inflation & Price Indices.
What is the difficulty level of this UPSC question?▼
This question is rated "easy". It tests basic recall and most well-prepared aspirants should answer it correctly.
How many UPSC Prelims questions have been asked from Inflation & Price Indices?▼
UPSC has asked 15 questions from Inflation & Price Indices (under Indian Economy) across multiple years. Visit the topic page to see the full list and year-wise trends.