McqMate
| Q. |
Which of the following is a consequence of inflationary price rise? |
| A. | Obstacle in development |
| B. | Increase in economic inequalities |
| C. | All of these |
| D. | Adverse effect on the balance of payment |
| Answer» C. All of these | |
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Explanation: Inflationary price rise is harmful to a country's economic performance and to the welfare of its citizens. It can create a random redistribution of income given that inflation does not have an equal impact on individuals and groups. The balance of payments may deteriorate because domestic inflation stimulates import spending, given that imports appear relatively cheaper, and dampens export sales. A continuous price rise can be an obstacle to development as it has an adverse effect on saving and investment and causes a fall in growth. |
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