Question

Match List - I (Type of Inflation) with List - II (Characteristic) and select the correct answer using the codes given below the lists.

List - I (Type of Inflation)	List - II (Characteristic)
A. Demand-pull Inflation	1. Initially price rises
B. Cost-push Inflation	2. Price-rise controlled by rationing and other means
C. Suppressed Inflation	3. Inflation in which prices increase as a result of increased production costs, as labour and raw materials, even when demand remains the same
D. Creeping Inflation	4. Inflation in which rising demand results in a rise in prices. 5. Fall in price of raw materials

• A. $4,1,2,5$
• B. $2,3,4,1$
• C. $4,3,2,1$
• D. $2,1,4,5$

Answer 1

Answer: (C)

$4,3,2,1$

Demand-pull Inflation: It takes place when aggregate demand is rising while the available supply of goods in becoming less. As a result, prices begin to rise in response to a situation often described as too much money chasing too few goods.
Cost-push Inflation: Cost-push inflation is caused by wage increase enforced by unions and profit increases by employers. It also came to be known as new inflation.
Suppressed Inflation: When the government imposes physical and monetary controls to check open inflation, it is known as repressed or suppressed inflation. The markt mechanism is not allowed to function normally by the use of licensing, price controls and rationing in order to suppress extensive rise in prices.
Creeping Inflation: When the rise in the prices is very slow like that of a small or creeper, it is called creeping inflation. In terms of speed, a sustained rise in prices of annual increase of less than $3$ per cent per annum is characterised as creeping inflation.