Food For Thought: Incremental Understanding

I accept Saurabh that the ultimate effect of this valuing up of the rupee in totalitarian would be inflation and nothing else ,
I get back to my previous view that the effect on GDP would be short term & in the long run everything production level comes back to the previous value.

However I stand by my statement that there would be a kind of utilitarian effect in the form that some wealth would be redistributed from the rich to the poor. The explanation is provided by taking a look at the classical Long Run Aggregate Supply Curve (LRAS). Whatever is shown in the figure is nothing new. I am only going to take a little help from the graph in explaining the phenomenon.
Initially there is an equilibrium and natural level of production is being met. When the rupee is valued up, as I said before people in the short term would not mind spending a little more. (Explanations provided in the previous blogs). This would increase the income of certain people who in turn would demand more and thus Aggregate Demand (AD0 to ADf) Curve would go up. Wages being sticky Short Run Supply Curve comes into the picture: resulting Y (production level) increase to Y*. Hence increase in GDP. But soon wages increase due to increase in price to the intermediate level Pi and supply curve goes up to SRASf finally everything settles down and a higher price level is reached Pf while production comes back to the level Y. Thus ultimate effect is there is no increase in GDP. However inflation happens.
Though I still hold:
1) There would be a redistribution of wealth.
2) Short term recession, consumer sentiment can be overcome by this phenomenon.
Then again why should a government take this ultimate step when recessionary cycles have become so short term in nature.