Q.
b) Discuss the meaning of inflation and the measures implemented by the government to control inflation.
(12 marks, 2011 Q5b)
A.
In economics, inflation is a sustained increase in the general price level of goods and services in an economy over a period of time.[1] It can be defined as too much money chasing too few goods.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation reflects a reduction in the purchasing power per unit of money – a loss of real value in the medium of exchange and unit of account within the economy.[2][3] A chief measure of price inflation is the inflation rate, the annualized percentage change in a general price index (normally the consumer price index) over time.[4]
Measures to control inflation - extracted from Slideshare: http://www.slideshare.net/raviinderahluwalia/measures-to-control-inflation
