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Consider the following statements:
1. Stagflation is defined as a condition in which price rise is declining at the same time economic growth slows down.
2. Stagflation is controlled by the Security Exchange Board of India (SEBI) through appropriate change in monetary policy.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements:1. Stagflation is defined as a condi...
Explanation:
Stagflation is a condition in which the economy experiences stagnant growth along with high inflation. This is a rare and undesirable situation as it poses a challenge for policymakers to address both issues simultaneously. Let us examine the given statements:
1. Stagflation is defined as a condition in which price rise is declining at the same time economic growth slows down.
This statement is incorrect. Stagflation is a condition where there is a combination of high inflation and slow economic growth. It is not defined as a situation where the rate of price rise is declining while economic growth slows down.
2. Stagflation is controlled by the Security Exchange Board of India (SEBI) through appropriate change in monetary policy.
This statement is also incorrect. SEBI is not responsible for controlling stagflation. Stagflation is a macroeconomic phenomenon that is influenced by various factors such as fiscal policy, monetary policy, international trade, and supply shocks. The central bank of a country, such as the Reserve Bank of India in India, is primarily responsible for managing monetary policy and controlling inflation.
Therefore, both statements are incorrect, and the correct answer is option D, i.e., neither 1 nor 2.
Stagflation is a condition in which the economy experiences stagnant growth along with high inflation. This is a rare and undesirable situation as it poses a challenge for policymakers to address both issues simultaneously. Let us examine the given statements:
1. Stagflation is defined as a condition in which price rise is declining at the same time economic growth slows down.
This statement is incorrect. Stagflation is a condition where there is a combination of high inflation and slow economic growth. It is not defined as a situation where the rate of price rise is declining while economic growth slows down.
2. Stagflation is controlled by the Security Exchange Board of India (SEBI) through appropriate change in monetary policy.
This statement is also incorrect. SEBI is not responsible for controlling stagflation. Stagflation is a macroeconomic phenomenon that is influenced by various factors such as fiscal policy, monetary policy, international trade, and supply shocks. The central bank of a country, such as the Reserve Bank of India in India, is primarily responsible for managing monetary policy and controlling inflation.
Therefore, both statements are incorrect, and the correct answer is option D, i.e., neither 1 nor 2.
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Community Answer
Consider the following statements:1. Stagflation is defined as a condi...
- Stagflation means a situation characterized by simultaneous increase in prices and stagnation of economic growth.
- It is described as a situation in the economy where the growth rate slows down, the level of unemployment remains steadily high and yet the inflation or price level remains high at the same time. Hence, statement 1 is not correct.
- Monetary policy refers to the policy of the Reserve Bank of India with regard to the use of monetary instruments under its control to achieve the specified goal of inflation/stagflation.
- The primary objective of the RBI’s monetary policy is to maintain price stability while keeping in mind the objective of growth. Hence, statement 2 is not correct.
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Consider the following statements:1. Stagflation is defined as a condition in which price rise is declining at the same time economic growth slows down.2. Stagflation is controlled by the Security Exchange Board of India (SEBI) through appropriate change in monetary policy.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'D'. Can you explain this answer?
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