UPSC 2011 › Indian Economy › Inflation & Price Indices

3 questions · 2011 · answers as per the UPSC key

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UPSC 2011 · Q4 · Indian Economy › Inflation & Price Indices · Save

India has experienced persistent and high food inflation in the recent past. What could be the reasons?

  1. Due to a gradual switchover to the cultivation of commercial crops, the area under the cultivation of food grains has steadily decreased in the last five years by about 30%.
  2. As a consequence of increasing incomes, the consumption patterns of the people have undergone a significant change.
  3. The food supply chain has structural constraints.

Which of the statements given above are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
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Answer: (b) 2 and 3 only
UPSC 2011 · Q13 · Indian Economy › Inflation & Price Indices · Save

A rapid increase in the rate of inflation is sometimes attributed to the "base effect". What is "base effect" ?

(a) It is the impact of drastic deficiency in supply due to failure of crops
(b) and
(c) given above is correct in this context
(d) None of the statements (a),
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Answer: (c) given above is correct in this context
UPSC 2011 · Q87 · Indian Economy › Inflation & Price Indices · Save

Economic growth is usually coupled with

(a) Deflation
(b) Inflation
(c) Stagflation
(d) Hyperinflation
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Answer: (b) Inflation