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Question

74. Match the correct pairs
1. Disinflation- A. It is a situation where the price increases are so out of control that the concept of inflation is meaningless.
2. Deflation- B. It occurs when the prices of goods rise while unemployment increases and spending declines.
3. Hyperinflation- C. It is a slowing in the rate of price inflation over the short term.
4. Stagflation- D. When the purchasing power of currency and wages are higher than they otherwise would have been.
Correct answer code is:

A
1-A, 2-B, 3-C, 4-D
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B
1-C, 2-D, 3-A, 4-B
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C
1-C, 2-B, 3-D, 4-A
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D
1-B, 2-A, 3-C, 4-D
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Solution

The correct option is B 1-C, 2-D, 3-A, 4-B

Disinflation is a slowing in the rate of price inflation. It is used to describe instances when the inflation rate has reduced marginally over the short term. Although it is used to describe periods of slowing inflation, disinflation should not be confused with deflation, which can be harmful to the economy.
Deflation is a contraction in the supply of circulated money within an economy, and therefore the opposite of inflation. In times of deflation, the purchasing power of currency and wages are higher than they otherwise would have been. This is distinct from but similar to price deflation, which is a general decrease in the price level, though the two terms are often mistaken for each other and used interchangeably.
Hyperinflation is extremely rapid or out of control inflation. There is no precise numerical indication of hyperinflation. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless. Although hyperinflation is considered a rare event, it occurred as many as 55 times in the 20th century in countries such as China, Germany, Russia, Hungary and Argentina.
A condition of slow economic growth and relatively high unemployment – economic stagnation – accompanied by rising prices or inflation and a decline in Gross Domestic Product (GDP). Usually, when unemployment is high, spending declines, as do prices of goods. Stagflation occurs when the prices of goods rise while unemployment increases and spending declines.


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