Economic growth is usually coupled with?

[UPSC Civil Services Exam – 2011 Prelims]

(a) Deflation

(b) Inflation

(c) Stagflation

(d) Hyperinflation


Answer: (b)        

Explanation:

Deflation

  • Occurs when asset and consumer prices fall over time.
  • Negative inflation rate.
  • Often used to express a declining economy.
  • Real interest rates become too high.
  • Increases the burden of debt and reduces the disposable income of indebted people.

Inflation

  • It refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing etc.
  • A certain level of inflation is required in the economy to ensure that expenditure is promoted and hoarding money through savings is demotivated.
  • As the spending increases, the demand also increases which leads to inflation.
  • Hence, Economic growth is usually coupled with inflation.

Stagflation

  • It is an economic event in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
  • It can also be alternatively defined as a period of inflation combined with a decline in the gross domestic product (GDP).

Hyperinflation

  • It is a term to describe rapid, excessive, and out-of-control general price increases in an economy.
  • It has two main causes: an increase in the money supply and demand-pull inflation.
  • It can occur in times of war and economic turmoil in the underlying production economy, in conjunction with a central bank printing an excessive amount of money.

Consider the following statements:                                                                   The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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Consider the following statements:                                                         The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

Read More »

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