Stagflation is associated with
A) cost- push inflation.
B) demand- pull inflation.
C) both types of inflation.
D) neither cost- push inflation nor demand- pull inflation because it is a different concept altogether.

Question

Quizplus · Accepted Answer

Stagflation is a phenomenon in which there is a combination of stagnant economic growth, high unemployment, and high inflation. This inflation is a result of cost-push factors such as rising production costs, fuel prices, and wages, all leading to a decrease in aggregate supply. Therefore, stagflation is associated with cost-push inflation, as opposed to demand-pull inflation which is caused by excess aggregate demand.

Stagflation Is Associated with