An adverse supply shock typically raises inflation and lowers aggregate demand (by reducing the purchasing power of consumers), thereby moving inflation up and output down. This gives rise to a well-known dilemma for monetary policy: Should monetary policy ease to reduce the decline in output or tighten to counter the rise in inflation?
Pandit Jawaharlal Nehru, who had a strong faith in the cooperative movement, while opening an international seminar on cooperative leadership in South-East Asia, had said “But my outlook at present is not the outlook of spreading the cooperative movement gradually, progressively, as it has done.