ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Inflation decreases during recessions and increases during expansions (recoveries). Another way to illustrate the effects of unemployed resources is with the production possibilities curve (see graph below).

Detailed explanation-2: -Inflation occurs due to an increase in demand (demand-pull inflation) or a rise in the cost of production (cost-push inflation). Change in demand or cost in production is caused by political, economic, and social factors. As a consequence of inflation, the buying power of money falls.

Detailed explanation-3: -Recession. Definition. Inflation is defined as the increase in the price levels of goods and services in an economy. Recession is said to be a period of slowing down of the economy indicated by negative growth.

Detailed explanation-4: -Meaning of low-inflation in English used to describe a period of time when prices are rising slowly: Both banks and bonds love a steady-growth, low-inflation economy.