All questions of Inflation and Business Cycle for BPSC (Bihar) Exam

Understanding the Statements
Statement-I describes a scenario of overheating in the economy, which is characterized by various negative symptoms, including downturns in aggregate demand and low inflation rates. However, the symptoms listed in Statement-I do not accurately represent the concept of economic overheating, which typically involves excessive demand leading to inflation, rather than falling production and stagnant employment.
Statement-II correctly defines a growth recession, indicating a situation where economic growth is so slow that job losses occur despite a positive GDP growth rate. This situation can indeed feel like a recession, as it signifies underlying economic weaknesses.
Analysis of the Statements
- Statement-I:
- Incorrectly describes overheating as it lists symptoms that align more with a recession rather than the excess demand seen in overheating scenarios.
- Symptoms like falling production levels and low inflation rates do not characterize an overheating economy.
- Statement-II:
- Correctly explains what a growth recession is.
- Highlights how slow growth can lead to job losses, even with positive GDP growth, which can create the perception of a recession.
Conclusion
Given this analysis, the correct option is:
- D: Statement-I is incorrect, but Statement-II is correct.
This understanding clarifies that while both statements discuss economic conditions, only Statement-II accurately describes a recognized economic concept, making Statement-I misleading in its context.