Higher prices and price increases combined with lower real output and income,resulting from a major increase in input prices in the economy is called:
A)deflation.
B)inflation.
C)stagflation.
D)none of the above.

Question

Quizplus · Accepted Answer

Stagflation is a situation where there is a combination of high inflation and stagnation in the economy, characterized by high unemployment rates, low economic growth, and high prices. This occurs when an increase in input costs (such as wages, raw materials or energy) leads to reduced production, which, combined with high demand, causes prices to increase. Stagflation can be a result of external shocks such as war or sudden changes in commodity prices, or from internal factors such as poor economic policies or market fluctuations.

Higher Prices and Price Increases Combined with Lower Real Output