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Questions
A moderate dose of inflation to necessary for the development of an economy. Briefly explain.
Creeping inflation is regarded essential for economic growth. Give reasons.
A mild inflation is beneficial for economic growth. Justify the statement.
Solution
- A mild inflation or creeping inflation is beneficial for economic growth. Increasing prices of goods and services generally lead to increase in the profit margin.
- This induces the producers to undertake more investment. As a result, the level of output and employment increases in the economy. In this way, mild inflation is regarded essential for economic growth.
RELATED QUESTIONS
'A state of running or hyperinflation in any economy is very harmful for production'. Justify the statement with two reasons.
What is walking inflation?
Study the relationship in the first pair of words and complete the second pair.
- Creeping inflation: The rate of inflation is 1% to 2% per annum.
- Running inflation: The rate of inflation is ______ per annum.
______ is beneficial for growth.
Match the following and select the correct option:
| Column A | Column B | ||
| (i) | Inflation caused by demand pull factors | A. | Hyper inflation |
| (ii) | Inflation caused by cost push factors | B. | Creeping inflation |
| (iii) | First stage of inflation | C. | Cost push inflation inflation |
| (iv) | Last stage of inflation | D. | Demand pull inflation |
Choose the correct answers to the questions from the given options.
Assertion (A): There has been a significant increase in global airfares post Russia - Ukraine war.
Reason (R): Higher fuel prices in the international market due to war.
Read the following statement carefully and choose the correct alternative given below:
Assertion (A): Value of money falls during inflation.
Reason (R): Government employees are compensated for inflation by raising their dearness allowance.
What do you understand by hyper inflation?
Explain creeping inflation impact on the economy?
When the general price level increases by 10% to 20% per annum, then it will be called:
