UPSC CSE Prelims

Correct Option: B Explanation: Economic expansion can raise household demand, investment and resource use, sometimes producing moderate price inflation, though growth need not always cause it. Option-wise Analysis: A: Incorrect - Deflation means falling prices and is not the usual association asserted here. B: Correct - growing aggregate demand may coincide with inflation. C: Incorrect - Stagflation means stagnant output coupled with inflation, contrary to ordinary growth. D: Incorrect - Hyperinflation is an extreme monetary breakdown, not a normal accompaniment of growth. Review Note: The relationship is empirical rather than necessary: productivity-driven economic growth can coexist with low or falling inflation.