Multiple choice

Which of the following types of inflation acts as an incentive for the industry and other sectors of the economy?

  1. Running Inflation

  2. Creeping Inflation

  3. Structural Inflation

  4. Stagflation

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Running Inflation - When the prices rise rapidly like the running of a horse at a rate of speed 10 to 20% per annum. The rate of the increase of price level gets further accelerated under running inflation. The price level under this type of inflation rises approximately by 10% every year. If government fails to curb running inflation in time, it may easily develop into galloping inflation. Creeping Inflation - Circumstance where the inflation of a nation increases gradually, but continually, over time. Although the increase is relatively small in the short-term as it continues over time, the effect will become greater and greater. It acts as an incentive for the industry and other sectors of the economy.  Structural Inflation - Inflation built into the economic system due to its government's monetary policy. In economics, stagflation is a situation in which the inflation rate is high and the economic growth rate slows down and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation or reduce unemployment may actually worsen economic growth.