Stagflation is the result of
A) an increase in short- run aggregate supply.
B) an increase in aggregate demand.
C) a decrease in aggregate demand.
D) a decrease in short- run aggregate supply.

Question

Quizplus · Accepted Answer

Stagflation occurs when there is a decrease in short-run aggregate supply, causing a decrease in real output or GDP, and an increase in the price level or inflation. This is different from inflation caused by an increase in aggregate demand, as in that case, output increases as well.

Stagflation Is the Result of