Economic growth is usually coupled with:
Answer & explanation
Answer: (b) Inflation
When an economy grows, incomes and spending rise. Demand then tends to push the general price level up, so growth usually comes with some inflation, typically mild to moderate. The other options describe falling prices, a growth slump or runaway prices, and none of these is the normal companion of growth.
- ✗ (a) Deflation is a sustained fall in the general price level. It usually goes with weak demand and slowdown, not expansion.
- ✓ (b) Rising output and incomes lift demand, and prices tend to rise with it. A study cited in an RBI research paper finds a positive relationship between output and inflation. Beyond a threshold level, though, high inflation starts to harm growth.
- ✗ (c) Stagflation is high inflation combined with low growth or high unemployment. It is a failure of growth, not its usual partner.
- ✗ (d) Hyperinflation is an extreme, runaway rise in prices. It damages savings and investment and is not what usually accompanies growth.
Remember · Growth normally brings mild to moderate inflation. Deflation, stagflation and hyperinflation are abnormal states. Stagflation means high inflation with low growth.
Sources
- RBI Development Research Group Study No. 45: Threshold Level of Inflation – Concept and Measurement ↗ “Dholakia and Sapre (2012) incorporate the speed of adjustment in the extended Phillips curve framework and find a positive relationship between output and inflation.”
- World Bank, Global Economic Prospects June 2022, Special Focus on stagflation ↗ “While there is no precise definition of stagflation, the term has been used to refer to a combination of high inflation and low growth (or high unemployment).”
Question: UPSC Civil Services (Preliminary) 2011, General Studies Paper I. Explanation: Minimalist IAS, checked 25 Oct 2026 (how we verify). ·
