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Economic growth is usually coupled with
1. Deflation
2. Inflation
3. Stagflation
4. Hyperinflation

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Best answer
Correct Answer - Option 2 : Inflation

The correct answer is Inflation.

  • Deflation
    • It occurs when asset and consumer prices fall over time.
    • It is a negative inflation rate.
    • It is often used to express a declining economy.
    • Real interest rates become too high.
    • It increases the burden of debt and reduces the disposable income of indebted people.
  • Inflation
    • It refers to the rise in the prices of most goods and services of daily or common use, such as food, clothing, housing etc.
    • A certain level of inflation is required in the economy to ensure that expenditure is promoted and hoarding money through savings is demotivated.
    • As the spending increases, the demand also increases which leads to inflation.
    • Hence, Economic growth is usually coupled with inflation.
  • Stagflation
    • It is an economic event in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
    • It can also be alternatively defined as a period of inflation combined with a decline in the gross domestic product (GDP).
  • Hyperinflation
    • It is a term to describe rapid, excessive, and out-of-control general price increases in an economy.
    • It has two main causes: an increase in the money supply and demand-pull inflation.
    • It can occur in times of war and economic turmoil in the underlying production economy, in conjunction with a central bank printing an excessive amount of money.

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