ForumIAS announcing GS Foundation Program for UPSC CSE 2025-26 from 19 April. Click Here for more information.
ForumIAS Answer Writing Focus Group (AWFG) for Mains 2024 commencing from 24th June 2024. The Entrance Test for the program will be held on 28th April 2024 at 9 AM. To know more about the program visit: https://forumias.com/blog/awfg2024
News:India’s retail price inflation has jumped to a 40-month high at a time when India’s growth has slowed down to a six-year low.This has prompted some economists to warn that the country could be entering into a stagflationary phase.
Facts:
About Stagflation:
- The term Stagflation was first coined by Paul Samuelson who was the first American to win the Nobel Prize in economics.
- Stagflation is a condition of slow economic growth and relatively high unemployment, or economic stagnation, accompanied by rising prices, or inflation.
- It can also be defined as inflation and a decline in the gross domestic product(GDP).
What causes Stagflation:
- The most analysed episodes of stagflation is the one in the US that began in 1974 and ended in the early 80s.
- It was set off by a series of supply shocks led by surging oil prices and an excessively expansionary monetary policy especially in 1972-73, which allowed expectations of inflation to become entrenched.
- This led to a breakdown of the inverse relationship between inflation and unemployment as suggested by the Phillips Curve.
Additional information:
About Phillips Curve:
- Phillips curve is a graphic curve which advocates a relationship between inflation and unemployment in an economy.
- As per the curve,there is an inverse relationship between inflation and unemployment.
- The concept states that with economic growth comes with inflation which in turn should lead to more jobs and less unemployment.
