With reference to the stagflation which of the following statements is correct:
A. It is a situation often deliberately brought by the government to reduce unemployment and increase demand by going for higher levels of economic growth.
B. It can also be understood from a different angle—when the economy is crossing a cycle of recession and government takes some economic policy decisions to revive the economy from recession.
C. It is a situation in an economy when inflation and unemployment both are at higher levels, contrary to conventional belief.
D. All of the above
Answer:C
With reference to the stagflation which of the following statements is correct:
A. It is a situation often deliberately brought by the government to reduce unemployment and increase demand by going for higher levels of economic growth. B. It can also be understood from a different angle—when the economy is crossing a cycle of recession and government takes some economic policy decisions to revive the economy from recession. C. It is a situation in an economy when inflation and unemployment both are at higher levels, contrary to conventional belief. D. All of the above
Explanation: A situation in an economy when inflation and unemployment both are at higher levels, contrary to conventional belief. Such a situation first arose in 1970s in the US economy (average unemployment rate above 6 per cent and the average rate of inflation above 7 per cent) and in many Euro-American economies. This took place as a result of oil price increases of 1973 and 1979 and anticipation of higher inflation.