Economy Inflation- 1 | Economy for UPSC 2026 (Pre & Mains) PDF Download

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ECONOMY 
INFL ATION 
Page 2


ECONOMY 
INFL ATION 
INFLATION 
Rate at which the general level of prices for 
goods and services is rising  
and 
the purchasing power of currency is falling. 
Page 3


ECONOMY 
INFL ATION 
INFLATION 
Rate at which the general level of prices for 
goods and services is rising  
and 
the purchasing power of currency is falling. 
CAUSES OF INFLATION 
Demand Pull 
Cost Push 
Wage 
Wage Inflation Spiral 
Page 4


ECONOMY 
INFL ATION 
INFLATION 
Rate at which the general level of prices for 
goods and services is rising  
and 
the purchasing power of currency is falling. 
CAUSES OF INFLATION 
Demand Pull 
Cost Push 
Wage 
Wage Inflation Spiral 
EFFECT OF INFLATION 
On - 
Creditors - Lose 
Debtors - Gain 
Export – Depends on movement of 
Currency (generally gain) 
Import - Depends on movement of 
Currency (generally lose) 
Page 5


ECONOMY 
INFL ATION 
INFLATION 
Rate at which the general level of prices for 
goods and services is rising  
and 
the purchasing power of currency is falling. 
CAUSES OF INFLATION 
Demand Pull 
Cost Push 
Wage 
Wage Inflation Spiral 
EFFECT OF INFLATION 
On - 
Creditors - Lose 
Debtors - Gain 
Export – Depends on movement of 
Currency (generally gain) 
Import - Depends on movement of 
Currency (generally lose) 
HOW IS INFLATION GOOD FOR ECONOMY 
• A little inflation encourages you to buy sooner - and that boosts economic 
growth. 
• Anyone with a mortgage or a loan benefits from inflation, as it has the effect 
of eroding debt. 
• In a world of zero inflation some companies might be forced to cut wages. 
• It keeps the interest rates positive. 
• The government has a huge debt, which is getting bigger thanks to a deficit.  
• It would love to see that eroded by inflation, which in turn would see its own 
income rise.  
• As long as there's a good dose of inflation in the system, tax revenue should 
go up, even if the economy is stagnant.