Ramesh Singh : Miscellaneous - 7 - UPSC MCQ

• The governments may take recourse to tighter monetary policy to cool down either the demand-pull or the cost-push inflations.

• This is intended to cut down the money supply in the economy by siphoning out the extra money (as RBI increases the Cash Reserve Ratio of banks in India) from the economy and by making money costlier (as RBI increases the Bank Rate or Repo Rate in India) This is a short-term measure. In the long-run, the best way is to increase production with the help of the best production practices.

• If GDP at Current Prices is equal to the GDP at Constant Prices, GDP deflator will be 1, implying no change in the price level.

• The GDP deflator is acclaimed as a better measure of price behaviour because it covers all goods and services produced in the country (because the weight of services has not been equitably accounted in the Indian "headline inflation', i.e., inflation at WPI).

• The NAIRU is that rate of unemployment which is consistent with a constant rate of inflation.

• It means at NAIRU, the upward and downward forces on price (inflation) and wage (unemployment) neutralise each other and there is no tendency of change in the rate of inflation.

• We may say that the NAIRU is the lowest unemployment rate that an economy can sustain without any upward pressure on the inflation rate.

• Reflation is a situation often deliberately brought by the government to reduce unemployment and increase demand by going for higher levels of economic growth.

• Governments go for higher public expenditures, tax cuts, interest rate cuts, etc Fiscal deficit rises, extra money is generally printed at higher levels of growth, wages increase and there is almost no improvement in unemployment.

• Inflation affects both the forms of expenditures -consumption as well as investment.

• Increased prices make our consumption levels fall as goods and services we buy get costlier.

• Family holding - which gives work to an average size family having one plough under the traditional farming system.

• Economic holding - which ensures a minimum satisfactory standard of living in a family.

• Optimum holding - the maximum size of the holding which must be possessed and owned by a family.

Data regarding the numerical achievements of land reforms have been highly discouraging.

(i) Tenancy reforms provided tenants with rights, but only 4 percent of the total operated areas in the country (14.4 million hectares of the operated area by 11 million tenants by 1992).

(ii) Redistribution of ownership rights of the land took place, but only up to 2 per cent of the total operated area in the country (less than 2 million hectares among the 4.76 million people by 1992).

(iii) Taken together, the whole process of land reforms could benefit only 6 percent of the operated area of the country with a negligible socio-economic positive impact.