1. Running Inflation: It refers to the situation where the price level rises very fast. In case, price level doubles up every 3 years. It is, generally, succeeded by galloping inflation.

2. The two fiscal measures to control inflation are: 

1. Decrease in public expenditure: One of the main reasons of inflation is excess public expenditure like building of roads, bridges etc. Government should drastically scale down its non essential expenditure. 

2. Increase in taxes: Government should levy some new direct taxes and raise rates of old taxes. 

3. Over valuation of money: To control the over valuation of money it is essential to encourage imports and discourage exports.

3. The effect, of high level inflation on the following is: 

1. Effect on Fixed Income Groups: This group includes government servants, pensioners, etc. who get a fixed monthly income. This class is warst affected by inflation because the purchasing power of their fixed income goes on decreasing with rising prices. 

2. Effect on Producers: In short run, they earn artificial margin of profit as the cost of production does not rise as fast as the price of their product. But in long run, the price level goes on increasing, the total consumption of their product would fall. The reduced consumption will ultimately raise the cost of production per unit and reduce the profits. 

3. Effect on Debtors and Creditors: Debtors gain when they pay back their debt during inflation. It is because the value of money was high when they borrowed but came down when they repaid their debts. Creditors are losers during inflation because of the above said reasons.

4. The three monetary policies of the Reserve bank of India to control credit are: 

1. Bank Rate Policy: It is the interest rate at which a central bank provides loans to banks. It is the rate at which the central bank discounts the bills and other instruments of commercial banks which are redeemable at par.

2. Open Market Operations: When use of bank rate is not effective enough in regulating the volume of money and credit, the central bank can resort to the use of open market operations. This instrument refers to the practice of sale and purchase of commercial paper and government securities by the central bank in the market on its own initiative in order to control the volume of credit. 

3. Variable Cash Reserve Requirements: The traditional instruments of quantitative credit control, bank rate policy and open market operations, suffer from certain inherent defects and have been found unsuitable to serve the interests of underdeveloped countries