69th BPSC Prelims (2023), question 119

📈 Economy

  1. Which factors could potentially contribute to stagflation in the Indian economy? 1. High inflation from increased Govt spending 2. Decline in industrial production/growth 3. Decrease in aggregate demand/consumer spending 4. Currency appreciation reducing export competitiveness.

    1. Only 1 and 2
    2. Only 2 and 3
    3. Only 1, 3 and 4
    4. 1, 2, 3 and 4
    Show answer

    Answer: D — 1, 2, 3 and 4

    All four factors — inflationary pressure, falling output, weak demand, and export competitiveness loss — can jointly produce stagflation (high inflation + low growth).

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