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Which of the following statements best describe the term Entrenched inflation?
- a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.
- b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.
- c)Inflation due to cut in the supply of key commodities because of negative economic shock
- d)Inflation due to the price level increases at a very rapid rate.
Correct answer is option 'B'. Can you explain this answer?
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Which of the following statements best describe the term Entrenched in...
Entrenched inflation
Definition:
Entrenched inflation refers to a situation where inflation persists even after the immediate problems that caused it have been resolved. It is a form of inflation that tends to stick around and becomes firmly established within an economy.
Explanation:
1. Inflation that tends to stick around:
- Entrenched inflation is characterized by a persistent increase in the general price level over an extended period of time.
- Unlike temporary inflation, which is caused by temporary problems and is rectified once the underlying issues are resolved, entrenched inflation continues even after the initial problems have been addressed.
2. Persistence despite problem resolution:
- Entrenched inflation occurs when inflationary pressures become ingrained in an economy, leading to a sustained rise in prices.
- It is often the result of structural factors, such as wage-price spirals, where workers demand higher wages to keep up with rising prices, leading to further price increases.
- It can also be caused by expectations of future inflation, where individuals and businesses anticipate higher prices and adjust their behavior accordingly, leading to a self-reinforcing cycle of inflation.
3. Examples:
- Entrenched inflation can be observed in economies with deep-rooted structural issues, such as excessive government spending, a lack of competition, or inefficient production processes.
- It can also occur in economies with high levels of inflation expectations, where individuals and businesses anticipate future price increases and adjust their behavior accordingly.
4. Impact:
- Entrenched inflation can have detrimental effects on an economy. It erodes the purchasing power of individuals and reduces the value of savings.
- It also creates uncertainty and instability, making it difficult for businesses to plan and invest.
- High inflation can also lead to social and political unrest, as it disproportionately affects low-income individuals and exacerbates income inequality.
Conclusion:
Entrenched inflation is a form of inflation that persists even after the initial problems that caused it have been resolved. It is characterized by a sustained increase in the general price level and can have significant negative impacts on an economy.
Definition:
Entrenched inflation refers to a situation where inflation persists even after the immediate problems that caused it have been resolved. It is a form of inflation that tends to stick around and becomes firmly established within an economy.
Explanation:
1. Inflation that tends to stick around:
- Entrenched inflation is characterized by a persistent increase in the general price level over an extended period of time.
- Unlike temporary inflation, which is caused by temporary problems and is rectified once the underlying issues are resolved, entrenched inflation continues even after the initial problems have been addressed.
2. Persistence despite problem resolution:
- Entrenched inflation occurs when inflationary pressures become ingrained in an economy, leading to a sustained rise in prices.
- It is often the result of structural factors, such as wage-price spirals, where workers demand higher wages to keep up with rising prices, leading to further price increases.
- It can also be caused by expectations of future inflation, where individuals and businesses anticipate higher prices and adjust their behavior accordingly, leading to a self-reinforcing cycle of inflation.
3. Examples:
- Entrenched inflation can be observed in economies with deep-rooted structural issues, such as excessive government spending, a lack of competition, or inefficient production processes.
- It can also occur in economies with high levels of inflation expectations, where individuals and businesses anticipate future price increases and adjust their behavior accordingly.
4. Impact:
- Entrenched inflation can have detrimental effects on an economy. It erodes the purchasing power of individuals and reduces the value of savings.
- It also creates uncertainty and instability, making it difficult for businesses to plan and invest.
- High inflation can also lead to social and political unrest, as it disproportionately affects low-income individuals and exacerbates income inequality.
Conclusion:
Entrenched inflation is a form of inflation that persists even after the initial problems that caused it have been resolved. It is characterized by a sustained increase in the general price level and can have significant negative impacts on an economy.
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Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer?
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Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer?.
Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer?.
Solutions for Which of the following statements best describe the term Entrenched inflation?a)Inflation that is due to temporary problems and is rectified once the underlying problems are resolved.b)Inflation that tends to stick around even after the immediate problems that spurred it on have resolved.c)Inflation due to cut in the supply of key commodities because of negative economic shockd)Inflation due to the price level increases at a very rapid rate.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
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