Refer to the information provided in Figure 27.4 below to answer the question(s) that follow. Figure 27.4
-Refer to Figure 27.4. Stagflation would cause
A) a higher price level and lower output.
B) a higher price level and higher output.
C) a lower price level and lower output.
D) a lower price level and higher output.

Question

Refer to the information provided in Figure 27.4 below to answer the question(s) that follow.  Figure 27.4
-Refer to Figure 27.4. Stagflation would cause
A) a higher price level and lower output. 
B) a higher price level and higher output. 
C) a lower price level and lower output. 
D) a lower price level and higher output.

Quizplus · Accepted Answer

Stagflation is a situation where the economy is experiencing high inflation and high unemployment at the same time. This means that the price level is higher than what it would be in a healthy economy, but the output is lower due to high unemployment. Therefore, choice A is the correct answer.

Refer to the Information Provided in Figure 27