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What is inflation? How does inflation impact various macroeconomic parameters? Suggest measures that should be taken to keep the rate of inflation under accepted limits.

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

3. What is inflation? How does inflation impact various macroeconomic parameters? Suggest measures that should be taken to keep the rate of inflation under accepted limits. (250 words)

Difficulty level: Easy

Reference: Insights on India

Why the question:

The question is part of the static syllabus of General studies paper – 3 and mentioned as part of Mission-2022 Secure timetable.

Key Demand of the question:

To write about inflation, its impact and measures needed to keep it under control.

Structure of the answer:

Introduction: 

Begin by defining inflation.

Body:

First, write about the impact of inflation on various macroeconomic parameters – purchasing power, growth, cost of living, availability of credit and exchange rates etc.

Next, write about the measures that are taken to keep inflation under tolerable limits – the monetary policy measures, fiscal policy measures and price control measures.

Conclusion:

Conclude by writing a way forward.