Multiple Choice Questions on Inflation which is due to factors other than those over which Monetary Policy has any control i........... for UPSC Civil Services Examination (General Studies) Preparation

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Multiple Choice Questions

Inflation which is due to factors other than those over which Monetary Policy has any control i...........

Economic Affairs Inflation
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    Inflation which is due to factors other than those over which Monetary Policy has any control is called:

    Hyper inflation

    Incorrect Answer

    Core inflation

    Incorrect Answer

    Cost-push inflation

    Correct Answer

    Benchmark inflation

    Incorrect Answer
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    Explanation:
    • Cost-push inflation happens due to non-monetary reasons and hence they cant be controlled through monetary policy that regulates the flow of money.
    • Cost-push inflation is a situation in which the overall price levels go up (inflation) due to increases in the cost of wages and raw materials.
    • Cost-push inflation develops because the higher costs of production factors decreases in aggregate supply (the amount of total production) in the economy. Since there are fewer goods being produced (supply weakens) and demand for these goods remains consistent, the prices of finished goods increase (inflation).

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    Raman singh

    Review answer explanation as Demand pull is caused due to over expansion of money supply factored in by over expansionary monetary policy.

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