Stagflation is a situation where there is a combination of stagnant economic growth or even a recession, high inflation rates, and high unemployment levels. It is often considered a difficult economic situation to address, as traditional monetary and fiscal policies may not be effective in tackling both inflation and unemployment simultaneously. Therefore, option B, heightened unemployment, is the correct choice.

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Stagflation

Question 34

Multiple Choice

Stagflation

A) was characterized by decreased prices.
B) was characterized by heightened unemployment.
C) led to immense increases in productivity growth.
D) was the main cause of the crisis of market fundamentalism.
E) was characterized by the lowest interest rates in U.S. history.

Correct Answer: