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Inflation BY AYUSSH SANGHI Important Terms relating to Inflation Part 4.16
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Inflation Spiral An inflationary situation in an economy, which results out of a process of salary/ wages and price interaction. tis popularly encapsulated in the following lines . It is popularly encapsulated in the following lines: "when wages pres s prices s up and prices pull wage s up 1S s up', is known as the inflationary spiral."
Inflation Spiral Alternatively, it is also called as the wage-price spiral This wage-price interaction was seen as a major cause of inflation in the year 1935 in the US economy, for the first time.
Reflation . Reflation is a situation often deliberately brought by the government to reduce unemployment and increase demand by going for higher Governments go for higher public expenditures, tax cuts, interest . Fiscal deficit rises, extra money is generally printed at higher level of levels of economic growth rate cuts, etc. growth, wages increase and there is almost no improvement in unemployment.
Reflation Reflation can also be understood from a different angle-wher the economy is crossing a cycle of recession (low inflation, high unemployment, low demand, etc.) and government takes some economic policy decisions to revive the economy from recession, certain goods see sudden and temporary increase in their prices, such price rise is also known as reflation
Reflation . It is the act of stimulating the economy by increasing the money supply or by reducing taxes. It is an act of pumping money in the market to increase the circulation so that economy can be stipulated again. . Example: In U.S, to increase the growth rate government has announced special bailout packages for the companies thus trying to pump economy out of recession.
Services Price Index The importance and growth of service sector is . Hence, there is need to develop service price indices for selected service sectors. Accordingly, the Office of the Economic Advisor, Department of Industrial Policy and Promotion, Ministry of Commerce and Industry has been in the process of developing Service Sector price Indices as per international best practices.
Services Price Index Studies are being commissioned for selected services like: road transport, railways, air transport, port, banking, insurance, posts, telecommunications, business services and trade services to develop service price index
Services Price Index The need for a services sector price index in India is warranted by the growing dominance of the sector in the economy. The WPI covers only commodities.