Which of the following characterizes stagflation?
A)An increase in both unemployment and inflation.
B)An increase in unemployment but a decrease in inflation.
C)A decrease in both unemployment and inflation.

Question

Quizplus · Accepted Answer

Stagflation is characterized by a simultaneous increase in both unemployment and inflation. This is a unique and challenging economic phenomenon because it goes against the traditional theory that there is a trade-off between inflation and unemployment. Typically, when inflation is high, unemployment is low, and vice versa. However, when both of these indicators are rising together, it can lead to a stagnant economy with few options for policymakers to address the problem.

Which of the Following Characterizes Stagflation