Question

1. “Inflation is inevitable in an economy attempting to grow rapidly in the presence of structural bottlenecks”. Analyze this statement in the context of COVID-19.

Answer 1

This statement is true that inflation is inevitable in an economy attempting to grow rapidly in the presence of structural bottlenecks This statement can be explained in a better way in the context of COVID-19.

Inflation is a situation which generally happens in the economy when there is a price rise in the economy and if the rise of the demand which finally increases the price of the commodity Somehow a little bit of inflation with a slower it is good for the economy but inflation of high rate and the stability is for long period then it will harm the economy in many ways.

It is true that inflation is inevitable or in other words, it is not postponed in comparison to growing rapidly the economic sectors.

Inflation is an unavoidable factor which cannot be avoided by anyone in the economy because the indicator of economic growth included a slow rise of the inflation in the economy

COVID-19 is a situation where there is rigorously downfall in the production activity and with this affect the supply in the market affected drastically if the product is not available up to a certain level then it is difficult to cover up the normal demand in the economy of all the sectors, therefore, it will create a rise in the inflation not because the people are facing a good purchasing power and they are demanding more but because of COVID 19 it is a situation where people are demanding necessary goods and in reality, the necessary goods are also not available in the economy, therefore, it will rise a situation of inflation in the economy.