What are the effects of inflation on various macroeconomic parameters. Suggest what actions can be taken to maintain inflation rates within acceptable boundaries.
Kartavya Desk Staff
Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.
Q5. What are the effects of inflation on various macroeconomic parameters. Suggest what actions can be taken to maintain inflation rates within acceptable boundaries. (250 words)
Difficulty level: Easy
Reference: TH
Why the question: India’s retail prices rose 3.54% in July, the slowest pace in almost five years, easing sharply from 5.1% in June. Food inflation, that has been high for about three years now, slid to a 13-month low of 5.4%. This is also the first time since August 2019 that inflation as per the Consumer Price Index (CPI) has aligned with the Reserve Bank of India’s median inflation target of 4%. Key Demand of the question: To write about inflation, its impact and measures needed to keep it under control. Structure of the answer: Introduction: Begin by defining inflation. Body: First, write about the impact of inflation on various macroeconomic parameters – purchasing power, growth, cost of living, availability of credit and exchange rates etc. Next, write about the measures that are taken to keep inflation under tolerable limits – the monetary policy measures, fiscal policy measures and price control measures. Conclusion: Conclude by writing a way forward.
Why the question:
India’s retail prices rose 3.54% in July, the slowest pace in almost five years, easing sharply from 5.1% in June. Food inflation, that has been high for about three years now, slid to a 13-month low of 5.4%. This is also the first time since August 2019 that inflation as per the Consumer Price Index (CPI) has aligned with the Reserve Bank of India’s median inflation target of 4%.
Key Demand of the question:
To write about inflation, its impact and measures needed to keep it under control.
Structure of the answer:
Introduction:
Begin by defining inflation.
First, write about the impact of inflation on various macroeconomic parameters – purchasing power, growth, cost of living, availability of credit and exchange rates etc.
Next, write about the measures that are taken to keep inflation under tolerable limits – the monetary policy measures, fiscal policy measures and price control measures.
Conclusion:
Conclude by writing a way forward.