ECONOMICA

C urrently, there is a huge debate about whether the Covid-19 induced economic crisis has pushed the major economies to stagflation. The debate is getting stronger in India, with the release of GDP data for the first quarter of FY21. But what exactly is stagflation? What are the main causes and why is it so dangerous? What is stagflation? Stagflation was first recognized during the 1970s when many developed economies experienced rapid inflation and high unemployment as a result of an oil shock. Stagflation is a period of rising inflation along with falling output and rising unemployment. As a result, real incomes fall as wages struggle to keep up with rising prices. It can also be defined as a period of inflation in addition to a decline in the gross domestic product (GDP).  The term stagflation , a portmanteau of stagnation and inflation , was first used during a period of inflation and unemployment in the United Kingdom in the 1960s and 1970s. UK policymakers failed to recognise th

Economic crisis is a phase in an economic cycle in which an economy faces travails and difficulties for a long time. It could be a sharp drop in the economic state of the country, manifested in a significant fall off in production; a violation of existing production relations; bankruptcy of enterprises; and/or rising unemployment and inflation. The result of this could be a decline in the living standards of the population and a sharp decrease in the real gross national product. Concept of economic crisis first set foot in the social sciences literature in 1960’s, defined as ‘ a period of difficulty, dismay or an emergency in the life of a country, a society or a corporation, or in relations of several countries. ’ Here’s an insight into the economic crisis faced by some nations: Zimbabwe The most neoteric example of hyperinflation, wherein prices change so hastily that every day the prices rise exponentially and money keeps on depreciating, virtually overnight or even in the