Inflation And Trade Cycles — Flashcards

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Inflation is a continuous rise in the general price level of goods and services in an economy over time. For example, if the price of petrol increases from ₹90 to ₹105 per litre over six months, it re…

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Creeping inflation is a slow and small rise in prices, not exceeding 3% per year. It is generally considered safe and can even encourage investment as people expect prices to rise slightly.

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Walking inflation occurs when prices rise between 3% and 10% per annum. It signals growing economic pressure and may require policy intervention to prevent further acceleration.

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Running inflation refers to a price rise between 10% and 20% per year. It harms the economy by reducing purchasing power and creating uncertainty among consumers and businesses.

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Galloping inflation occurs when prices rise more than 20% per year. It is highly dangerous as it erodes savings, distorts economic decisions, and can lead to social unrest.

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Hyperinflation is an extremely rapid rise in prices, often at double or triple-digit rates per year. For example, prices may double every few weeks. It leads to the collapse of money's value and econo…

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Demand-pull inflation occurs when aggregate demand exceeds aggregate supply, pushing prices up. Example: High consumer spending during festivals. Cost-push inflation happens when production costs (lik…

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Main causes include: 1) Increase in government spending (plan and non-plan), 2) Deficit financing, 3) Long-term development projects, 4) Easy credit availability, 5) High population growth, and 6) Red…