BANKING AFFAIRS

Detailed explanation-1: -On the contrary when the government imposes physical and monetary controls to check open inflation, it is known as repressed or suppressed inflation. The market mechanism is not allowed to function normally by the use of licensing, price controls and rationing in order to suppress extensive rise in prices.

Detailed explanation-2: -Suppressed inflation describes a situation in which, at existing wages and prices, the aggregate demands for current output and labour services exceed the corresponding aggregate supplies.

Detailed explanation-3: -Open Inflation: In a free market economy, prices go up freely due to supply-demand imbalances leading to open inflation. Suppressed Inflation: Suppressed inflation occurs in a controlled economy where the upward pressure on prices is not allowed to influence the quoted or managed prices.

Detailed explanation-4: -1:When prices rise in an open market, i.e., a market where there is no control on prices by the government or any authority, then such inflation is called open inflation.

Detailed explanation-5: -The most well-known indicator of inflation is the Consumer Price Index (CPI), which measures the percentage change in the price of a basket of goods and services consumed by households.