ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Inflation decreases during recessions and increases during expansions (recoveries).

Detailed explanation-2: -An economic boom is an often-short-lived period of rapid growth of real GDP resulting in lower unemployment, accelerating inflation rate and rising asset prices.

Detailed explanation-3: -A boom is a period of strong economic expansion where many businesses are operating at full capacity or above capacity, and the unemployment rate is very low. Income and production are at very high levels. This can lead to rapid growth in prices.

Detailed explanation-4: -The boom and bust cycle is caused by central banks’ monetary policy, which lowers interest rates and freely lends capital during periods of prosperity. The economy then overheats as a result of irrational and unsustainable investment behavior.