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Examine the effect of inflation on various macroeconomic parameters. Propose actions that can be implemented to maintain inflation rates within acceptable boundaries.

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

4. Examine the effect of inflation on various macroeconomic parameters. Propose actions that can be implemented to maintain inflation rates within acceptable boundaries. (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-2024 Secure timetable.

Key Demand of the question:

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

Directive word:

Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.

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.