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Indian Economy > Inflation > Flashcards

Inflation Flashcards

1
Q

Relation between Economic Growth and Inflation

A

Broadly, Economic Growth α Inflation

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2
Q

Inflation rate 2 - 3% is?

A

Creeping Inflation

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3
Q

Inflation rate 3 - 10% is?

A

Walking Inflation

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4
Q

Inflation rate 10 - 50% is?

A

Galloping Inflation

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5
Q

Inflation rate > 50% is?

A

Hyperinflation

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6
Q

Demand - Pull Inflation Cause

A

High Demand ← High Money Supply

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7
Q

Cost - Push Inflation Cause

A

Low Supply ← High Cost of Production

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8
Q

Structural - Inflation

A

Administrational Concerns such as Infrastructure contribute to

Also known as Bottle Neck Inflation

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9
Q

Methods to estimate Inflation

A
  1. Wholesale Price Index (WPI)
  2. Consumer Price Index (CPI)
  3. GDP Deflator
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10
Q

WPI (Publisher and characteristic)

A

Published by DIPP (Department of Industrial Policy and Promotion) under MoCI (Ministry of Commerce and Industry)

WPI does not include services

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11
Q

CPI (Answer types of CPI)

A

Includes goods and services

Types of CPI
1. CPI (Rural) + CPI (Urban) + CPI (Combined) + CPI (Food Index) = Published by NSO
2. CPI (Agri Labor) + CPI (Rural Labor) + CPI (Industrial Labor) = Published by Labor Bureau

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12
Q

Which measure is used for policy making?

A

CPI (Combined)

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13
Q

PPI

A

From producer perspective

Includes goods and services

Curbs double counting inherent in WPI

Better measure than WPI

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14
Q

Headline Inflation

A

Change in value of all goods in the basket

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15
Q

Core Inflation

A

Excludes food and fuel items (Volatile) from Headline Inflation

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16
Q

Refined Core Inflation

A

Exclusion of Food, Fuel, and Light (Volatile) from headline inflation

17
Q

Inflation Premium

A

Interest rate adjusted to inflation

18
Q

Phillips Curve Observation

A

Inflation α 1/(Unemployment)

19
Q

Flexible Inflation Targeting (FIT)

A

RBI signed with GOI - MPFA [Monetary Policy Framework Agreement]

Setting 4 ± 2% Inflation rate for upcoming 5 years (2020 - 21 to 2025 - 26)

20
Q

Deflation

A

Rate of Price Change (RoPC) < 0

21
Q

Disinflation

A

RoPC > 0 but declining

22
Q

Stagflation

A

RoPC = 0 - Stagnant Inflation

23
Q

Reflation

A

RoPC > 0 - Growing from Deflation

24
Q

Skewflation

A

Inflation because of few goods

25
Q

Skimpflation

A

Same price level with lower quality

(Eg) ₹5 Parle - G over the years

Indian Economy (7 decks)

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