Stagflation refers to
A)a combination of rising unemployment and rising trade deficits
B)a combination of high unemployment and rising prices
C)high and rapidly increasing inflation
D)extremely high unemployment
E)a combination of rising trade deficits and rising federal government budget deficits

Question

Quizplus · Accepted Answer

Stagflation is a combination of high inflation and high unemployment, which leads to a stagnant economy. Option A and E mention rising trade deficits, which may contribute to a stagnant economy but are not necessarily part of the definition of stagflation. Option D only refers to unemployment without mentioning inflation. Therefore, option B is the best choice.

Stagflation Refers to