ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Inflation, the sustained and broad rise in the prices of goods and services over time, erodes purchasing power. A small but positive inflation rate is economically useful, while high inflation tends to feed on itself and to impair the economy’s long-term performance.

Detailed explanation-2: -Over this period, average growth rates seem to fall only slightly as inflation rates move up to 20-25 percent. But growth rates decline more steeply as inflation rates approach 25-30 per-cent, and growth rates become increasingly negative at higher rates of inflation.

Detailed explanation-3: -In an inflationary environment, unevenly rising prices inevitably reduce the purchasing power of some consumers, and this erosion of real income is the single biggest cost of inflation. Inflation can also distort purchasing power over time for recipients and payers of fixed interest rates.

Detailed explanation-4: -Disproportionately Impacts Low-Income Households. Raises Cost Of Living. Raises Interest Rates. Hurts The Growth Of Stocks And Bonds. 22-Nov-2022