The practice of reducing the size of a product while maintaining its sticker price is called :
- A.Shrinkflation
- B.Reflation
- C.Disinflation
- D.Deflation
Correct answer
Explanation
The correct answer is A, Shrinkflation. When a company quietly cuts the quantity in a pack but keeps the same price, the buyer pays more per unit; this hidden price rise is shrinkflation.
The term joins shrink and inflation and was popularised by the British economist Pippa Malmgren. Firms use it when costs of raw materials, packaging or transport rise, because customers notice a higher price tag far more than a slightly smaller packet. A biscuit pack that drops from 100 grams to 90 grams at the same price is a typical example, and a 10 per cent cut in quantity means about an 11 per cent rise in the price per gram. Price indices try to capture it by tracking price per unit.
Option B is wrong because reflation is a deliberate policy of raising demand and prices to pull an economy out of a slump. Option C is wrong because disinflation is a fall in the rate of inflation, with prices still rising but more slowly. Option D is wrong because deflation is a sustained fall in the general price level.
Exam tip: inflation = prices rise, disinflation = rise slows, deflation = prices fall, reflation = prices pushed back up, shrinkflation = smaller pack at the same price.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
Show answer
GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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