Stagflation occurs when the
A) price level and real GDP increase at the same time.
B) price level increases and real GDP decreases.
C) price level decreases and real GDP increases.
D) price level and real GDP decrease at the same time.

Question

Quizplus · Accepted Answer

Stagflation is a situation where there is a combination of high inflation and a stagnant economy, where real GDP decreases or remains stagnant. Hence, option B is the correct answer.

Stagflation Occurs When the