UPSC Exam > UPSC Questions > Which one of the following best describes the...
Start Learning for Free
Which one of the following best describes the term Sticky Inflation?
- a)It refers to the situation where corporate greed drives inflation.
- b)It refers to a phenomenon which leads to persistent inflation.
- c)It refers to the rapid decrease in the overall price level of goods and services.
- d)It is a temporary inflation spike caused by a sudden increase in consumer demand.
Correct answer is option 'B'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Which one of the following best describes the term Sticky Inflation?a)...
Sticky inflation has dashed the hopes of early rates cuts with experts now pencilling in repo rate cut by the RBI from December this year. Economists expect a shallow rate cut cycle with RBI likely to lower the repo rate by 75 – 100 basis points.
About Sticky Inflation
- Sticky inflation refers to a phenomenon where prices do not adjust quickly to changes in supply and demand, leading to persistent inflation.
Features of sticky inflation:
- Prices for goods or services that don't appear to be coming down anytime soon are considered sticky.
- Causes: Rising wages and prices for consumer goods and services are typically the main factors behind inflation stickiness.
- Prices for medical services, education, and housing are some of the most important factors that can contribute to sticky inflation.
- It erodes the purchasing power of consumers and puts pressure on housing affordability.
- Sticky inflation presents challenges for central banks in controlling inflation without causing a recession.
- To address sticky inflation, central banks usually raise interest rates.
- However, raising rates too fast can cause the economy to fall into a recession, while not raising them enough will allow prices to continue increasing.
Hence option b is the correct answer.
Free Test
FREE
| Start Free Test |
Community Answer
Which one of the following best describes the term Sticky Inflation?a)...
Sticky Inflation
Sticky inflation refers to a phenomenon which leads to persistent inflation. It is characterized by a situation where inflation remains high over an extended period of time, despite various measures taken to control it. This type of inflation is often difficult to bring down quickly and may require sustained efforts by policymakers.
Factors contributing to Sticky Inflation
- Cost-Push Inflation: When the cost of production increases due to factors like rising wages or raw material prices, it can lead to persistent inflation.
- Expectations: If businesses and consumers expect prices to continue rising, they may adjust their behavior accordingly, leading to a self-fulfilling cycle of inflation.
- Monetary Policy: In some cases, ineffective monetary policy or delays in implementing necessary measures can contribute to sticky inflation.
- External Shocks: Events like oil price hikes or global economic downturns can also contribute to persistent inflation.
Implications of Sticky Inflation
- Erodes purchasing power: High and persistent inflation can erode the purchasing power of consumers, leading to a decrease in real wages.
- Uncertainty: Businesses may find it challenging to plan for the future in an environment of sticky inflation, as pricing decisions become more difficult.
- Interest rates: Central banks may need to raise interest rates to control inflation, which can have implications for borrowing costs and economic growth.
In conclusion, sticky inflation poses challenges for policymakers and can have significant economic implications. It is essential to address the underlying factors contributing to persistent inflation to maintain price stability and sustainable economic growth.
Sticky inflation refers to a phenomenon which leads to persistent inflation. It is characterized by a situation where inflation remains high over an extended period of time, despite various measures taken to control it. This type of inflation is often difficult to bring down quickly and may require sustained efforts by policymakers.
Factors contributing to Sticky Inflation
- Cost-Push Inflation: When the cost of production increases due to factors like rising wages or raw material prices, it can lead to persistent inflation.
- Expectations: If businesses and consumers expect prices to continue rising, they may adjust their behavior accordingly, leading to a self-fulfilling cycle of inflation.
- Monetary Policy: In some cases, ineffective monetary policy or delays in implementing necessary measures can contribute to sticky inflation.
- External Shocks: Events like oil price hikes or global economic downturns can also contribute to persistent inflation.
Implications of Sticky Inflation
- Erodes purchasing power: High and persistent inflation can erode the purchasing power of consumers, leading to a decrease in real wages.
- Uncertainty: Businesses may find it challenging to plan for the future in an environment of sticky inflation, as pricing decisions become more difficult.
- Interest rates: Central banks may need to raise interest rates to control inflation, which can have implications for borrowing costs and economic growth.
In conclusion, sticky inflation poses challenges for policymakers and can have significant economic implications. It is essential to address the underlying factors contributing to persistent inflation to maintain price stability and sustainable economic growth.
Attention UPSC Students!
To make sure you are not studying endlessly, EduRev has designed UPSC study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UPSC.
|
Explore Courses for UPSC exam
|
|
Similar UPSC Doubts
Top Courses for UPSCView all
Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer?
Question Description
Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.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 one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.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 one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer?.
Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.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 one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.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 one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer?.
Solutions for Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
Download more important topics, notes, lectures and mock test series for UPSC Exam by signing up for free.
Here you can find the meaning of Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Which one of the following best describes the term Sticky Inflation?a)It refers to the situation where corporate greed drives inflation.b)It refers to a phenomenon which leads to persistent inflation.c)It refers to the rapid decrease in the overall price level of goods and services.d)It is a temporary inflation spike caused by a sudden increase in consumer demand.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice UPSC tests.
|
|
Explore Courses for UPSC exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup