[Solved] Which of the following is a typical cause of stagflation? — Ans: Simultaneous occurrence of cost-push inflation and stagnant economic growth | Economic Awareness

Economic Awareness - Sectors of Indian Economy

Which of the following is a typical cause of stagflation?

ASimultaneous occurrence of cost-push inflation and stagnant economic growth

BExcessive aggregate demand causing high growth and inflation

CRapid technological progress reducing production costs

DGovernment subsidies lowering prices

Step-by-Step Solution

Step 1: Understand stagflation
Stagflation is a situation with high inflation, stagnant growth, and high unemployment.
Step 2: Analyze options
Cost-push inflation combined with stagnant growth causes stagflation. Excess demand causes growth, not stagnation. Technological progress lowers costs, and subsidies reduce prices.
Final Answer:
Simultaneous occurrence of cost-push inflation and stagnant economic growth → Option A
Quick Check:
Stagflation = cost-push inflation + stagnant growth ✅

Quick Trick: Stagflation = inflation with no growth.

Common Mistakes:

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