|
Sno. |
PARAMETERS |
Does Inflation Increase by this Parameter? |
Affects Which Side |
Reasons |
|
1 |
Increase in Income/ Purchasing Power |
Yes |
D |
More money in hands of people |
|
2 |
Increase in Cost of Production/Input |
Yes |
S |
Reduced profits and motivation to supply |
|
3 |
Increase in Money Supply |
Yes |
D |
More money in hands of people |
|
4 |
Increase in Printing of New Money |
Yes |
D |
More money supply, more money in hands of people |
|
5 |
Increase in Interest Rate |
No |
D/S |
Demand: Less demand for goods & services Supply: Raising Capital becomes expensive |
|
6 |
Increase in Fiscal Deficit |
Yes |
D |
Expansionary Fiscal Policy -> More money in hands of people |
|
7 |
Increase in Public Expenditure/ Expansionary Policy/ Fiscal Stimulus |
Yes |
D |
More money in hands of people |
|
8 |
Increase in Loan Waiver |
Yes |
D |
More money in hands of people |
|
9 |
Increase in MSP |
Yes |
D/S |
Demand: More money in hands of farmers Supply: Increase in prices of foodgrains |
|
10 |
Monsoon Failure |
Yes |
S |
Impacts crop supply, also affects farmers' income |
|
11 |
Increase in Indirect Taxes |
Yes |
S |
Items become costly |
|
12 |
Increase in Direct Taxes |
No |
D |
Reduced Purchasing Powers |
|
13 |
Increase in Inflation Indexed Wages |
Yes |
D |
More money in hands of people |
|
14 |
Increase in Population |
Yes |
D |
Rise in demand |
|
15 |
Policy Paralysis |
Yes |
S |
Reduced EoDB & motivation to supply |
|
16 |
Increase in Net Exports |
Yes |
S |
Supply Scarcity in Domestic Market |
|
17 |
Increase in Global Oil Commodity Price |
Yes |
S |
Imported Inflation |
|
18 |
Currency Depreciation |
Yes |
S |
Imports become expensive -> Imported Inflation |
|
19 |
FDI/FII Inflow |
Uncertain net impact |
D/S |
Supply: Improves supply Demand: Improved growth & rising incomes |
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