What causes stagflation?
A)a stagnant economy
B)high inflation
C) high unemployment
D) all of the above

Question

Quizplus · Accepted Answer

Stagflation is caused by a combination of stagnant economic growth, high inflation, and high unemployment. When economic growth is stagnant or slow, it leads to a reduction in job creation and a rise in unemployment. This lack of growth, coupled with high inflation (i.e., rising prices), leads to reduced purchasing power of wages and creates a vicious cycle of declining consumption and further economic slowdown. As businesses struggle to maintain profitability and cut costs, they may lay off workers or reduce wages, further exacerbating the unemployment problem. These factors, combined, produce a unique and challenging economic environment known as stagflation.

What Causes Stagflation