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  • Inflation or persistent upward movement of prices results in a decline in the purchasing power of money
  • A small dose of inflation at the rate of less than 5 % is good for the economy because it strengthens the developmental push of the economy
  • Inflation at a higher rate has bad economic and social consequences for the economy.
  • Inflation could be caused either because of excess of demand over supply or because of increase in the cost of production or both.
  • Inflation can be checked with the use of monetary measures, fiscal measures and investment control
  • In India, general causes of inflation have been population explosion, poor performance of agricultural and industrial sectors, higher government expenditure, etc.

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