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Theory of inflation part 2

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Theory of inflation part 2

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  5. Theory of InflationPart -- 2 For More Live Classes& PDF https://www.yuvaplus.in

  6. Effects of inflation• Lender          =>>  Looser ● Borrower   =>> Gainer• Bond issuer =>> Gainer• Bond holder =>> Looser• Fixed income earner =>> Looser         • Variable income earner =>> May be Gainer• Domestic  currency =>> Depreciates • Export  =>>Decreases• Import  =>> Increases• Savings  =>> Decreases• Inequality  =>> Increases• Fiscal deficit  =>> Increases• Investment  =>> Decreases• Growth =>> Decreases For More Live Classes& PDF https://www.yuvaplus.in

  7. Corrective measures against inflationOrAnti inflationary measures Inflation is to be controlled by reducing money supply in the economy or by reducing aggregate demand in the economy. For More Live Classes& PDF https://www.yuvaplus.in

  8. Goverment Measures / Fiscal measures The fiscal  measures  undertaken by the government in form of -- 1. Decreasing government expenditure specially non -- development expenditures 2. Increasing Direct taxes to reduce disposable income3. Decrease indirect taxes on commodities and services4. Not to follow deficit financing For More Live Classes& PDF https://www.yuvaplus.in

  9. Monetary measures• The monetary  measures undertaken by the central bank. • The contractionary monetary policy followed during inflationary period are : 1. Increasing CRR2. Increasing SLR3. Increasing bank rate4. Increasing repo rate5. Increasing reverse repo rate6. Increasing Marginal standing Facility ratio7. Selling government securities under open market operations8. Lowering credit rationing limit9. Moral suasion. For More Live Classes& PDF https://www.yuvaplus.in

  10. Direct measures 1. Imposing price ceiling by the government under price control mechanism2. Initiating rationing3. Encouraging production of necessary commodities4. Utilisation of buffer stock.5. Initiating Vigilance against hoarding and preventing black marketing6. Ban on export of essential items7. Suspending future trading activities. For More Live Classes& PDF https://www.yuvaplus.in

  11. MCQ on Inflation For More Live Classes& PDF https://www.yuvaplus.in

  12. Which among the following is exact opposite of inflation? A. StagflationB. DisinflationC. HyperinflationD. Deflation For More Live Classes& PDF https://www.yuvaplus.in

  13. 2. Which of the following is phenomenon that leads to Demand-Pull Inflation? A. It is a situation when aggregate demand in an economy outpaces aggregate supplyB. It is a situation of persistent rise in inflation along with  fall in growth and increase in unemploymentC. It is a situation caused by an increase in prices of inputs like labour, raw material etcD. It is a situation when a nation experiences very high and accelerating inflation. For More Live Classes& PDF https://www.yuvaplus.in

  14. 3. Which out of the following is phenomenon that leads to Cost-Push Inflation? A. It is a situation when aggregate demand in an economy outpaces aggregate supplyB. It is a situation of persistent rise in inflation along with dip in growth and increase in unemploymentC. It is a situation caused by an increase in prices of inputs like labour, raw material etcD. It is a situation when a nation experiences very high and accelerating inflation. For More Live Classes& PDF https://www.yuvaplus.in

  15. 4. Inflationary gap said to exist when _________? A. Real GDP > Potential GDPB. Real GDP < Potential GDPC. Real GDP = Potential GDPD. Unemployment rate > natural rate of unemployment For More Live Classes& PDF https://www.yuvaplus.in

  16. 5. Deflationary gap said to exist when _________? A. Real GDP > Potential GDPB. Real GDP < Potential GDPC. Real GDP = Potential GDPD. Unemployment rate > natural rate of unemployment For More Live Classes& PDF https://www.yuvaplus.in

  17. 6. Which out of the following is phenomenon that leads to Stagflation? A. It is a situation when aggregate demand in an economy outpaces aggregate supplyB. It is a situation of persistent rise in inflation along with fall in growth and increase in unemploymentC. It is a situation caused by an increase in prices of inputs like labour, raw material etcD. It is a situation when a nation experiences very high and accelerating inflation. For More Live Classes& PDF https://www.yuvaplus.in

  18. 7. Which one of the following is likely to be the most inflationary in its effect? A. Repayment of public debtB. Borrowing from the public to finance a budget deficitC. Borrowings from banks to finance a budget deficitD. Creating new money to finance a budget deficit For More Live Classes& PDF https://www.yuvaplus.in

  19. 8. Which out of the following is phenomenon that leads to Deflation? A. It is a decrease in the rate of inflation – a slowdown in the rate of increase of the general price level of goods and servicesB. It is a situation of persistent rise in inflation along with dip in growth and increase in unemploymentC. It is the situation where prices fall continuously or have tendency to fallD. It represents price rise in all goods and services but does not include articles from food and energy sector. For More Live Classes& PDF https://www.yuvaplus.in

  20. 9. Which out of the following is phenomenon that leads to Disinflation? A. A slowdown in the rate of increase of the general price level of goods and servicesB. It is a situation of persistent rise in inflation along with dip in growth and increase in unemploymentC. It is the situation where prices fall continuously or have tendency to fallD. It represents price rise in all goods and services but does not include articles from food and energy sector. For More Live Classes& PDF https://www.yuvaplus.in

  21. 10. When too much money chases too few goods, the resulting Inflation is called: (a)    Deflation(b)    Demand-pull Inflation(c)    Cost push inflation(d)    Stagflation For More Live Classes& PDF https://www.yuvaplus.in

  22. 11. Cause of Inflation in India is / are: (a)    Deficit financing(b)    Erratic agriculture growth(c)    Inadequate rise in industrial production(d)    All of the above For More Live Classes& PDF https://www.yuvaplus.in

  23. 12. Stagflation means: (a)    Inflation with stagnation(b)    Recession with stagnation(c)     Inflation galloping like stage(d)    Inflation & increasing output For More Live Classes& PDF https://www.yuvaplus.in

  24. 13. Which is the most effective quantitative method to control inflation in the economy? (a)    Bank rate policy(b)    Selective credit control(c)    Cash reserve ratio(d)    Both (a) and (b) For More Live Classes& PDF https://www.yuvaplus.in

  25. 14. Consider the following statements      1. Inflation benefits the debtors     2. Inflation benefits the bondholders Which of the  statements given above is /  are correct A. 1 onlyB. 2 onlyC. Both 1 & 2D. None of the above For More Live Classes& PDF https://www.yuvaplus.in

  26. 15. With reference to inflation in India which of the following statement is correct A. Controlling the inflation in India is the responsibility of the GOI onlyB. The RBI has no role in controlling the inflationC. Decreased money circulation helps in controlling the inflationD. Increased money circulation helps in controlling the inflation For More Live Classes& PDF https://www.yuvaplus.in

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