UPSC CSE Prelims 2018
General Studies (Paper 1)
Answer & Explanation
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Correct Answer:
Option B —
Inflation
This famous quote by the economist Norman Coulborn is one of the most classic definitions of Demand-Pull Inflation. It describes a situation where the demand for goods and services exceeds the available supply, leading to a general increase in prices.Why this happens:
When people have more disposable income (too much money) but the production of goods remains stagnant (too few goods), buyers compete for what is available. Sellers respond by raising prices, which reduces the purchasing power of the currency.
Answer verified by Quintessence Classes faculty — Karan Nagar, Srinagar.
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