With reference to the stagflation, consider the following statements:1. It is characterized by sloweconomic growthand relatively high unemployment2. It was first recognized during the 1970s when many developed economies experienced rapid inflation and high unemployment as a result of an oil shock.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 'C'. Can you explain this answer?

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With reference to the stagflation, consider the following statements:

1. It is characterized by slow economic growth and relatively high unemployment

2. It was first recognized during the 1970s when many developed economies experienced rapid inflation and high unemployment as a result of an oil shock.

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 'C'. Can you explain this answer?

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Daily Current Affairs MCQ- August 31, 2022

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With reference to the stagflation, consider the following statements:1...

Authorities worldwide, particularly central bankers, foresaw a period in the near future “where growth is low, unemployment is at least up a little bit and inflation is still high”, adding, “So you could call that stagflation”.

The most difficult problem for policymakers is when inflation runs high even as economic output either stagnates or, worse, shrinks. The slowdown in economic activity, in turn, leads businesses to shed jobs and the resultant situation is termed as ‘stagflation’.
One of the classic instances when most economies including the U.S. faced ‘stagflation’ was during the ‘oil shock’ of the early 1970s when an embargo led by the oil producers’ cartel OPEC caused the price of crude to almost quadruple in a period of just under six months.

What has sparked the latest concerns about stagflation?

While the outbreak of the COVID-19 pandemic and the curbs imposed to contain the spread of the virus caused the first major recent economic slowdown worldwide, the subsequent fiscal and monetary measures taken to address the downturn, including substantial increases in liquidity in most of the advanced economies, fuelled a sharp upsurge in inflation.
The ongoing war in Ukraine following Russia’s invasion of its southern neighbour and the consequent Western sanctions on Moscow have caused a fresh and as yet hard-to-quantify ‘supply shock’.

Hence both statements are correct.

Answered by Notes Wala · View profile

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With reference to the stagflation, consider the following statements:1. It is characterized by sloweconomic growthand relatively high unemployment2. It was first recognized during the 1970s when many developed economies experienced rapid inflation and high unemployment as a result of an oil shock.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 'C'. Can you explain this answer?

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