When inflation was high also the recession was high how these two contradictor

When inflation was high also the recession was high how
these two contradictory things occur at a same time

Question Posted / sunil kumar deo

3 Answers
6736 Views
ADP, I also Faced
E-Mail Answers

Answers were Sorted based on User's Feedback

When inflation was high also the recession was high how these two contradictory things occur at a ..

Answer / rahul

it is totally depend on the mentality of the people because
if inflation is high,result is that price is high of the
commedities so people think about the future so they start
to invest thier money and save expenses. Result is that
lack of the liquidity in market and if there is no proper
liquidation in market recession is high.

Is This Answer Correct ?

15 Yes

2 No

When inflation was high also the recession was high how these two contradictory things occur at a ..

Answer / s balasubramanian

When the inflation is high, prices go up and money value is
depreciated. What paid earlier for which you have to pay
more for getting the commodities. Purchasing power of
people is coming down, which in turn reduced demand.

Due to reduced demand Industry cannot use its full capacity
and with less production recession starts. With onset of
recession, again liquidity in the market is tightened.

It is all chain of events. If liquidity is good, people
will mind for paying more. Example is Real estate boom
which we witnessed earlier. With high inflation and
recession, money circulation is reduced and people are not
able to commit for long term.

That is the main reason, RBI has injected money into the
market by reducing the interest rates and also cutting down
the CRR etc.

Is This Answer Correct ?

7 Yes

1 No

When inflation was high also the recession was high how these two contradictory things occur at a ..

Answer / giri

Inflation is caused by two reasons :-
1) Demand Pull Inflation
2) Cost Push Inflation

When cost push inflation occurs then the cost of the
commodoties rised because of the increase in the price of
the raw materials.

Due to this the people of the country has to pay more for
the same commodity than what they were paying. Due to this
they have to decrease the consumption of the other services
like hotels, airlines etc. Which causes service industries
to suffer from the losses because of the low demand of
their services.

Companies layoff the workers from their jobs because of the
less demand of their services and even manufacturing
companies produces less products because of their less
consumption and the result of this lead to recession.

Is This Answer Correct ?

4 Yes

0 No

Post New Answer

More Banking Finance Interview Questions

can i carry indian currency to other countries and convert it there itself eg:- UK,USA?

3 Answers

What are limited liability companies? What are its two types?

0 Answers

Do have any idea about Triple Talaq?

0 Answers IBPS,

Can profits be known from balance sheet of any company?

0 Answers State Bank Of India SBI,

How YOU prepared for interview?

0 Answers State Bank Of India SBI,

What is mergers and acquisitions?

0 Answers

How does the default risk premium being calculated?

0 Answers SEBI,

How can i start buying a share. How can i find dealers. Can any one give me just an idea about this. When to buy ? How to buy? where to Buy ? How can i sell it ? How i came to know it is right time to sell . so that i can gain money ? Advance thanks

0 Answers

What Are The Rules For User Names And Passwords?

0 Answers IBM,

What pieces of research might you be asked to do as a graduate recruit in the department you're applying to?

0 Answers

What is the educational qualification required for the entrance exam?

0 Answers

What do u you mean by deferred revenue expenditure?

7 Answers Capital IQ,

For more Banking Finance Interview Questions Click Here