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Consider the following statements.
- Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month.
- Disinflation is the exact opposite of inflation.
- Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.
How many of the above statements are correct?
- a)Only two
- b)Only one
- c)All three
- d)None
Correct answer is option 'A'. Can you explain this answer?
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Most Upvoted Answer
Consider the following statements. Deflationrefers to a period when ev...
Explanation:
The given statements are as follows:
1) Deflation refers to a period when even though prices are rising, it is happening at a slower rate each passing month.
2) Disinflation is the exact opposite of inflation.
3) Reflation typically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.
Let's analyze each statement to determine their accuracy:
Statement 1: Deflation refers to a period when even though prices are rising, it is happening at a slower rate each passing month.
Accuracy: Incorrect
Explanation: Deflation refers to a sustained decrease in the general price level of goods and services in an economy. It is characterized by a negative inflation rate, which means that prices are actually falling, not rising. Therefore, the statement is incorrect.
Statement 2: Disinflation is the exact opposite of inflation.
Accuracy: Correct
Explanation: Disinflation refers to a decrease in the rate of inflation over time, but it does not mean that prices are falling. It simply implies that the rate of price increase is slowing down. So, this statement is correct.
Statement 3: Reflation typically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.
Accuracy: Incorrect
Explanation: Reflation refers to the action taken by policymakers to stimulate economic growth and increase inflation after a period of deflation or disinflation. It involves measures such as increased government spending, tax cuts, or reducing interest rates. However, it does not necessarily follow deflation. Reflationary policies can be implemented at any time to boost economic activity. Therefore, the statement is incorrect.
Considering the analysis of each statement, we can conclude that only statement 2 is correct. So, the correct answer is option 'A' - Only one.
The given statements are as follows:
1) Deflation refers to a period when even though prices are rising, it is happening at a slower rate each passing month.
2) Disinflation is the exact opposite of inflation.
3) Reflation typically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.
Let's analyze each statement to determine their accuracy:
Statement 1: Deflation refers to a period when even though prices are rising, it is happening at a slower rate each passing month.
Accuracy: Incorrect
Explanation: Deflation refers to a sustained decrease in the general price level of goods and services in an economy. It is characterized by a negative inflation rate, which means that prices are actually falling, not rising. Therefore, the statement is incorrect.
Statement 2: Disinflation is the exact opposite of inflation.
Accuracy: Correct
Explanation: Disinflation refers to a decrease in the rate of inflation over time, but it does not mean that prices are falling. It simply implies that the rate of price increase is slowing down. So, this statement is correct.
Statement 3: Reflation typically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.
Accuracy: Incorrect
Explanation: Reflation refers to the action taken by policymakers to stimulate economic growth and increase inflation after a period of deflation or disinflation. It involves measures such as increased government spending, tax cuts, or reducing interest rates. However, it does not necessarily follow deflation. Reflationary policies can be implemented at any time to boost economic activity. Therefore, the statement is incorrect.
Considering the analysis of each statement, we can conclude that only statement 2 is correct. So, the correct answer is option 'A' - Only one.
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Community Answer
Consider the following statements. Deflationrefers to a period when ev...
- Disinflation refers to the trend when the inflation rate decelerates. Suppose it was 10% in April, 7% in May and 5% in June. This is disinflation. In other words, disinflation refers to a period when even though prices are rising (or inflation is happening), it is happening at a slower rate each passing month.
- Deflation is the exact opposite of inflation. Imagine if the general prices level in June was 5% lower than what it was in June last year. That’s deflation.
- Reflation typically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.
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Consider the following statements. Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month. Disinflation is the exact opposite of inflation. Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.How many of the above statements are correct?a)Only twob)Only onec)All threed)NoneCorrect answer is option 'A'. Can you explain this answer?
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Consider the following statements. Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month. Disinflation is the exact opposite of inflation. Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.How many of the above statements are correct?a)Only twob)Only onec)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month. Disinflation is the exact opposite of inflation. Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.How many of the above statements are correct?a)Only twob)Only onec)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month. Disinflation is the exact opposite of inflation. Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.How many of the above statements are correct?a)Only twob)Only onec)All threed)NoneCorrect answer is option 'A'. Can you explain this answer?.
Consider the following statements. Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month. Disinflation is the exact opposite of inflation. Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.How many of the above statements are correct?a)Only twob)Only onec)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Consider the following statements. Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month. Disinflation is the exact opposite of inflation. Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.How many of the above statements are correct?a)Only twob)Only onec)All threed)NoneCorrect answer is option 'A'. Can you explain this answer? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Consider the following statements. Deflationrefers to a period when even though prices are rising it is happening at a slower rate each passing month. Disinflation is the exact opposite of inflation. Reflationtypically follows deflation as policymakers try to pump up economic activity either by government spending more and/or interest rates being reduced.How many of the above statements are correct?a)Only twob)Only onec)All threed)NoneCorrect answer is option 'A'. Can you explain this answer?.
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