State the types of Inflation.

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Q. State the types of Inflation.

Andhra Pradesh BieapBIEAP AP Intermediate (1st Year) Commerce Board 2019Subjective· 5mImportance★★★★★est

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Inflation is a continuous rise in the general price level. Its main types are classified on four bases: speed (creeping, walking, running, galloping/hyper), cause (demand-pull and cost-push), coverage (comprehensive and sporadic), and government reaction (open and suppressed).

Meaning

Inflation is a situation of a sustained and continuous rise in the general level of prices in an economy, which reduces the value (purchasing power) of money. Inflation is classified in several ways.

1. On the basis of speed (rate) of rise in prices

Creeping inflation: prices rise very slowly, usually less than 3% a year. It is mild and considered good for growth.
Walking inflation: prices rise at a moderate rate, roughly 3% to 10% a year. It is a warning signal.
Running inflation: prices rise rapidly, around 10% to 20% a year, and need control.
Galloping or hyper-inflation: prices rise at a very high and uncontrollable rate (very large percentages); money almost loses its value. This is the most dangerous type.

2. On the basis of cause

Demand-pull inflation: caused when aggregate demand exceeds aggregate supply — too much money chasing too few goods.
Cost-push inflation: caused by a rise in the cost of production (higher wages, higher raw-material or input prices), which pushes up prices.

3. On the basis of coverage

Comprehensive inflation: prices of all goods and services in the economy rise.
Sporadic inflation: prices rise only in some sectors or regions (for example, a particular commodity), not throughout the economy.

4. On the basis of government reaction (control) …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CBSE 2024Set ANNUAL2 marks
$Q. Write a short note on: Meaning of Inflation$
›Reveal solutionSolution

Inflation is a sustained rise in the general price level, accompanied by a fall in the purchasing power of money.

Explanation

Inflation refers to a situation in which there is a continuous and considerable rise in the general level of prices of goods and services in an economy. It is not a rise in the price of one or two goods, but a general and persistent rise in prices. As prices rise during inflation, the value or purchasing power of money falls — a given amount of money buys fewer goods than before. Inflation is generally caused by an excess of aggregate demand over the available supply of goods (demand-pull) or …

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CBSE 2023Set ANNUAL2 marks
$Q. Write a short note on: Demand-pull inflation$
›Reveal solutionSolution
Demand-pull inflation is a rise in the general price level caused by aggregate demand exceeding aggregate supply at full employment — a case of too much money chasing too few goods. Excess demand, arising from higher spending or money supply, pulls up prices.

Meaning

Demand-pull inflation is the type of inflation that arises when the total (aggregate) demand for goods and services in the economy is greater than the total (aggregate) supply available at the full-employment level of output. Since output cannot be increased beyond full employment in the short run, the excess demand pulls up the prices — hence the name demand-pull inflation.

Causes

Demand-pull inflation may be caused by factors that raise aggregate demand, such as:

an increase in the money supply and easy availability of credit;

an increase in government expenditure, especially deficit financing;

an increase in consumer spending and investment;

a rise in exports and incomes. …
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CBSE 2020Set ANNUAL2 marks
$Q. Write a short note on: Inflation$
›Reveal solutionSolution
Inflation is a persistent and appreciable rise in the general level of prices over a period of time. As prices rise, the purchasing power of money falls, so the same amount of money buys fewer goods and services.

Meaning

Inflation means a continuous and considerable rise in the general price level in an economy over a period of time. It is not a rise in the price of a single good but a rise in the average of all prices.

When inflation occurs, the value or purchasing power of money falls, because a given sum of money buys fewer goods than before.

It is generally caused either by an excess of demand over supply (demand-pull inflation) or by rising costs of production (cost-push inflation). …
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Q.State the types of Inflation.

Concept understanding — Types and Causes of Inflation

Meaning

1. On the basis of speed (rate) of rise in prices

2. On the basis of cause

3. On the basis of coverage

4. On the basis of government reaction (control) …

Explanation

Meaning

Causes

Q.State the types of Inflation.

Meaning

1. On the basis of speed (rate) of rise in prices

2. On the basis of cause

3. On the basis of coverage

4. On the basis of government reaction (control) …

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