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WBCS Preliminary Examination 2021 — General Studies · Question 120 of 200

Q120
Indian EconomyInflation
Inflation is
  1. a.one time price level rise.
  2. b.increasing profits in production.
  3. c.increase in deficit financing.
  4. d.continuous increase in price level.

Answer: (D) continuous increase in price level.

Inflation is a sustained, continuous rise in the general price level over time, which erodes the purchasing power of money. A one-time rise in prices is not inflation, rising profits are a possible effect, and deficit financing is one of its causes rather than its definition. In India, headline inflation is measured by the Consumer Price Index (CPI-Combined) compiled by NSO, and under flexible inflation targeting the RBI's Monetary Policy Committee aims at 4% with a band of 2% on either side. Related terms: deflation (falling prices), disinflation (a falling rate of inflation), stagflation (inflation with stagnation).

Q119 Whole paperQ121