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World food prices reach new peak since July 2011
Discuss the major causes of inflation in an economy? What can a government do to control inflation? (250 words)
Approach:
- Introduce by describing the phenomenon of inflation and its effects
- Elaborate on demand-pull and supply-push inflation, giving examples
- Discuss the major reasons for an inflation in India - i.e food inflation, crude oil price rise, etc.
- Discuss tools of fiscal and monetary policy available with the government to deal with inflation
- Conclusion
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