Question33 Generally speaking, the rate of inflation ________ during a recession. falls, then rises None of these answers is correct. falls rises stays the same ResetMaximum marks: 1 Flag question undefined

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BlackTom AI · Accepted Answer

Let’s examine what the question is asking: how does the rate of inflation typically behave during a recession?
Option 1: "falls, then rises". This would imply inflation first declines and then increases within the recession period itself. In practice, while inflation can bounce during the recovery phase, the standard behavior within a recession is not a temporary rise after an initial fall; the question asks for the general tendency during a recession, so this sequencing is not the conventional description.
Option 2: "None of these answers is correct." If we can identify a classic, widely accepted pattern, this choice is unlikely. Since many texts note a fall in inflation during recessions due to decreased demand and slack in the economy, this option would be inappropriate unless all other options are demonstrably wrong.
Option 3: "falls". This aligns with the common macroeconomic understanding that recession weakens demand, reduces price pressures, and thus lowers the inflation rate. This is especially true in demand-driven inflation models where lower consumption and investment reduce overall price levels.
Option 4: "rises". An overall rise in inflation during a recession is not consistent with typical demand-destraining conditions. If anything, inflation tends to ease because of reduced spending power and weaker output, unless special supply shocks are at play.
Option 5: "stays the same". Inflation remaining unchanged ignores the negative demand pressures and idle capacity characteristic of recessions, making this option unlikely as a general rule.
In summary, the core idea is that recessionary conditions dampen demand and capacity pressures, which most commonly pull inflation downward rather than upward, making the fall in inflation the best representative option among the choices.

Question33 Generally speaking, the rate of inflation ________ during a recession. falls, then rises None of these answers is correct. falls rises stays the same ResetMaximum marks: 1 Flag question undefined

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