The situation in an economy which is growing slowly along with rapid inflation (rising price level) is called

examrobotsa's picture

Submitted by examrobotsa on

Q: (CDS-I/2021)
The situation in an economy which is growing slowly along with rapid inflation (rising price level) is called

question_subject: 

Economics

question_exam: 

CDS-I

stats: 

0,181,125,61,28,181,36

keywords: 

{'rapid inflation': [0, 0, 0, 1], 'recession': [0, 0, 2, 0], 'stagnation': [0, 0, 0, 1], 'deflation': [0, 0, 2, 1], 'stagflation': [0, 0, 1, 3], 'economy': [1, 3, 8, 35], 'price level': [0, 1, 0, 2], 'situation': [0, 0, 1, 4]}

The situation being described in the question is an economy that is experiencing slow growth along with rapid inflation. This combination of slow growth and high inflation is known as "stagflation," which is the correct answer option.

Option 1, "Stagnation," refers to a situation in which there is little or no economic growth. This is not the correct answer because the question states that the economy is growing slowly.

Option 2, "Deflation," refers to a decrease in the overall price level of goods and services. This is not the correct answer because the question states that there is rapid inflation, which implies an increase in the price level.

Option 4, "Recession," refers to a significant decline in economic activity, often characterized by negative growth in GDP. This is not the correct answer because the question states that the economy is growing, although at a slow pace.

Therefore, the correct answer is option 3, "Stagflation," which accurately describes the situation of slow growth and rapid inflation in the economy.

Practice this on app