Q79
Indian EconomyInflation
A persistent fall in the general price level of goods and services is known as
- a.Deflation
- b.Disinflation
- c.Stagflation
- d.Depression
Answer: (A) Deflation
Deflation is a sustained fall in the general price level, i.e. negative inflation. Disinflation (B) is only a fall in the rate of inflation, with prices still rising but more slowly; stagflation (C) is stagnant growth and high unemployment together with high inflation, as in the oil shocks of the 1970s; and depression (D) is a severe, prolonged fall in output and employment, like the Great Depression of 1929. Related terms: reflation (deliberate stimulus to pull an economy out of deflation), hyperinflation (runaway price rise) and core inflation (excluding food and fuel). In India inflation is measured by the CPI, and the RBI's target is 4% with a band of plus or minus 2%.