UPSC CSE Prelims 2010
| Term | Most Appropriate Description |
|---|---|
| 1. Melt down | Fall in stock prices |
| 2. Recession | Fall in growth rate |
| 3. Slow down | Fall in GDP |
Which of the pairs given above is/are correctly matched?
Pair 2 (Recession – Fall in growth rate): A recession is characterized by a significant decline in economic activity across the economy, lasting more than a few months. It is typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A common technical definition is two consecutive quarters of negative real GDP growth, which directly implies a fall in the growth rate of the economy. This pair is correctly matched.
Pair 3 (Slow down – Fall in GDP): An economic slowdown refers to a period where the rate of economic growth (GDP growth) decreases, but the GDP generally continues to expand. It signifies a reduced pace of economic expansion, distinct from an absolute contraction in GDP. While the phrase 'Fall in GDP' can be ambiguous, in this context, it is interpreted as a fall in the rate of growth of GDP, making the pair correctly matched.
Pair 1 (Melt down – Fall in stock prices): A meltdown refers to a severe and rapid collapse in financial markets, often characterized by widespread panic selling and a significant loss of asset values across the market. It is a more extreme event than a general or ordinary fall in stock prices. Therefore, the description "Fall in stock prices" is an oversimplification and not the most appropriate description for a meltdown.
Options (a), (c), and (d) are incorrect as they either include Pair 1 as correctly matched or exclude Pair 2 and/or Pair 3, which are correctly matched.