2011 GS Paper I, all questions

UPSC Prelims 2011 · GS Paper I

Question 87: Economy and Social Development

Economic growth is usually coupled with

aDeflation
bInflation
cStagflation
dHyperinflation

AnswerThe answer is (b).

Economic growth raises incomes, demand and usually the money supply and credit, so prices tend to rise gradually. Some inflation therefore accompanies growth in most economies. Deflation signals weak demand, stagflation is inflation with stagnant growth and high unemployment, and hyperinflation is runaway price rise that harms growth. Mild inflation is the usual companion of growth.

Why each option is right or wrong
  • (a) Deflation is associated with weak demand and slow growth.
  • (b) Right: growth is usually coupled with a mild rise in prices.
  • (c) Stagflation means inflation with stagnant output, the opposite of growth.
  • (d) Hyperinflation is runaway inflation that harms growth.

Explanation: written by UPSC Grade, not by UPSC.

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Source: UPSC, Civil Services (Preliminary) Examination 2011, General Studies Paper I, Series A. The paper on upsc.gov.in.