ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Rising inflation means you have to pay more for the same goods and services. This can help you in the form of income inflation or asset inflation, such as in housing or stocks, if you own the assets before prices rise, but if your income doesn’t keep pace with inflation, your buying power declines.

Detailed explanation-2: -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-3: -Deflation, or negative inflation, happens when prices generally fall in an economy. This can be because the supply of goods is higher than the demand for those goods, but can also have to do with the buying power of money becoming greater.

Detailed explanation-4: -Based on speed, there are 4 different types of inflation – hyperinflation, galloping, walking, and creeping.

Detailed explanation-5: -Disproportionately Impacts Low-Income Households. Raises Cost Of Living. Raises Interest Rates. Hurts The Growth Of Stocks And Bonds.