Multiple Choice Questions on Consider the following statements given below 1 Inflation is a disincentive to save 2 Creation of ex........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

Consider the following statements given below 1 Inflation is a disincentive to save 2 Creation of ex...........

Economic Affairs Inflation
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    Consider the following statements given below.

    1.Inflation is a disincentive to save.

    2.Creation of extra purchasing power leads to cost-push inflation.

    3.Headline inflation measure demonstrates overall inflation in the economy.

    Choose the correct statements

    1 only

    Correct Answer

    2 and 3

    Incorrect Answer

    1 and 2

    Incorrect Answer

    All of the above

    Incorrect Answer
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    Explanation:

    1 only

    Statement 1 is correct. Inflation reduces the purchasing power of money, which can act as a disincentive to save.

    Statement 2 is incorrect. Creation of extra purchasing power usually leads to demand-pull inflation, not cost-push inflation.

    Statement 3 is incorrect. Headline inflation measures the overall inflation in the economy, including food and energy prices, among others. Therefore, it is not specific to overall inflation.

    By: Kamal Kashyap
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