Stagflation usually results from
A)a supply shock.
B)a decrease in aggregate demand.
C)an increase in aggregate supply.
D)an increase in aggregate demand.

Question

Quizplus · Accepted Answer

Stagflation occurs when there is a supply shock, such as an increase in the price of oil or a decrease in the availability of important raw materials. This reduces the supply of goods and services, which drives up their prices, and can lead to a slowdown in economic output and employment growth. Stagflation is not caused by a decrease in aggregate demand or an increase in aggregate supply, and it is not typically associated with an increase in aggregate demand.

Stagflation Usually Results from