Inflation refers to the continuous and sustained growth in the general price level. As the price level rises, it reduces the purchasing power or value of cash balances held by the consumers to reduce. This causes real income to decline.
A certain level of inflation is desirable in an economy to promote growth but a high rate of inflation is harmful. Inflation can be of several types such as
Demand-pull inflation
Cost-push inflation
There are several measures used to calculate inflation, for instance, the consumer price index. To correct inflationary pressures, a government uses contractionary fiscal and monetary policy.
If an economy is experiencing a cyclical downturn and output does not return to the secular growth trend, the economy is said to be experiencing structural stagnation.
<h3>What is structural stagnation?</h3>
This stagnation is attached to economies that are matured and it occurs when growth rate do the economy decreases rather than increasing.
The population may be decreasing and yet the country is experiencing stagnation.
Therefore, If an economy is experiencing a cyclical downturn and output does not return to the secular growth trend, the economy is said to be experiencing structural stagnation.
