23 Topics.
0 of 7 Concepts Done
What to Study: How is inflation defined, and what does it do to the purchasing power of money? Is a rise in the price of one item inflation? Be clear on the difference between a general rise in prices and a change in a single price, and between the price level and the inflation rate. Which bodies measure inflation in India?
What to Study: Learn the five labels for inflation by its rate, from the mildest to the most extreme, and the rough range of each. These ranges are conventions that differ between sources, not official limits. Understand how mild inflation and galloping inflation change saving, lending and trust in money. What causes hyperinflation, and which episodes are well known? What is the standard academic threshold for hyperinflation (Cagan's monthly rate)?
Asked in UPSC PrelimsUPSC 2010
What to Study: Understand what deflation is and what causes it. Why are falling prices harmful? Think about what people do with spending and borrowing when prices keep falling, and what this does to demand, jobs and the risk of depression.
What to Study: Is disinflation the same as deflation? Be clear on the difference. Work through an example, such as an onion price series, in which the inflation rate falls year after year, and ask what is happening to the price itself.
What to Study: What does reflation mean, and when is it used? Understand the tools policymakers use for it. How does it differ from ordinary inflation?
What to Study: Use a seasonal rise in onion prices as an example to understand skewflation. How does it differ from general inflation, in which most prices rise together?
What to Study: Be clear about the meaning of each term. Which of these is held down by price controls and rationing? How does asset price inflation differ from consumer price inflation, and why does it matter for financial stability? Why might a price index miss shrinkflation?