ECONOMICS
INFLATION
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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short period during which the nation’s total output of goods and services decreases.
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short period during which the nation’s total output of goods and services increases.
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sustained period during which the nation’s total output of goods and services decreases.
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sustained period during which the nation’s total output of goods and services increases.
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Detailed explanation-1: -In an inflationary environment, unevenly rising prices inevitably reduce the purchasing power of some consumers, and this erosion of real income is the single biggest cost of inflation. Inflation can also distort purchasing power over time for recipients and payers of fixed interest rates.
Detailed explanation-2: -Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Detailed explanation-3: -Stagflation is an economic condition when stagnant economic growth, high unemployment, and high inflation combine together. Simply put, stagflation is a portmanteau of stagnant growth and rising inflation.
Detailed explanation-4: -However, if one goes by Samuelson-Nordhaus definition of inflation, a rise in the general level of prices is inflation. It means that any rise in the general price level over and above the base-year level is inflation.