Stagflation is a situation where unemployment is very high, economic growth rate is too low, and inflation rate is high. Inflation is the rate at which prices of services and goods in an economy increases. Stagflation should be avoided as it is unhealthy for the economy of the nation whereas inflation is expected and natural. You can read about Inflation in Economy- Types of Inflation, Inflation Remedies, Effect of Inflation in the given link.
Stagflation occurs when there is an increase in money supply, and harsh regulations. Inflation occurs due to many causes, a couple of them are cost-pull inflation, demand-pull inflation.
Further readings:
- Indian Economy Notes for UPSC Civil Service Exam
- Monetary Policy – Objectives, Monetary Policy Committee, Instruments of Monetary Policy
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Related Links |
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Wholesale Price Index (WPI) – An Overview, Differences with CPI – Indian Economy Notes |
Consumer Price Index (CPI) – Types of CPI, Calculation of CPI – Indian Economy Notes |
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