Stagflation results from
A) an increase in government expenditures financed by an increase in the quantity of money.
B) a leftward shift in the short- run aggregate supply curve.
C) a rightward shift in the aggregate demand curve.
D) a rightward shift in the short- run aggregate supply curve.

Question

Quizplus · Accepted Answer

Stagflation results from a leftward shift in the short-run aggregate supply curve, which causes a decrease in output and an increase in prices. This can happen due to factors such as supply shocks (e.g. oil price increases) or a decrease in productive capacity. Options A, C, and D do not accurately describe the causes of stagflation.

Stagflation Results from