If there is a lack of money supply in comparison to the supply of goods and services, then the possible consequence would be ___

Question

If there is a lack of money supply in comparison to the supply of goods and services, then the possible consequence would be ___?

Nishant eAcademy Courses and Test series

Options

a. Hyperinflation
b. Inflation
c. Deflation
d. Devaluation
Solution
Right Answer: Option c
Extra Details:
Deflation is the decline in the prices of goods and services that occur when the rate of inflation falls below 0%.
It will take place naturally, if and when the money supply of an economy is limited.
It indicates deteriorating conditions.
It is normally linked with significant unemployment and low productivity levels of goods and services.
Nishant eAcademy App

Be the Change

Crack India’s Top Government Exams with Free Coaching

Leave a Comment

error: Content is protected !!
Scroll to Top
Last updated: September 27, 2022 Updated on 11:40 AM