Q. Consider the following pairs about types of inflation and their meanings:
1. Creeping Inflation: A kind of mild inflation that boosts demand.
2. Trotting Inflation: When inflation rises to 10 percent or more.
3. Core Inflation: It measures rising prices in everything including food and energy.
4. Disinflation: It is opposite of inflation in which the prices fall.
Select the correct answer using the codes given below:
Answer: B
Notes:
Explanation: Inflation means a sustained increase in the general price level. However, this increase in the cost of living can be caused by different factors.
- Creeping or mild inflation is when prices rise 3 percent a year or less.
- Trotting Inflation is when inflation rises to 10 percent or more.
- Core inflation reflects the long-term trend in a particular price level. It is a measure of inflation that excludes certain items that face volatile price movements(like food and energy) because in finding out the legitimate long run inflation, short-term price volatility and transitory changes in price must be removed
- Disinflation is a reduction in rate of inflation whereas DEFLATION is fall in prices (opposite of inflation).
Source: Indian Economy by Sankarganesh Karuppiah
