- Stagflation is a situation with high inflation and high unemployment.
- The Phillips Curve suggests an inverse relationship between inflation and unemployment.
- However, stagflation disproves this in the short term.
- The text states that the original Phillips curve concept was disproven by stagflation in the 1970s.
- It does not explicitly discuss the role of monetary policy in controlling stagflation.
- Stagflation is often triggered by supply-side factors.
Diagram: RBI’s Monetary Policy Toolkit
- Repo Rate
- Reverse Repo Rate
- Standing Deposit Facility
- Marginal Standing Facility
- Bank Rate
- Liquidity Adjustment Facility
- Reserve Requirements
- Market Stabilization Scheme