Stagflation can be explained by
A)the IS curve shifting up.
B)the IS curve shifting down.
C)the LM curve shifting to the right.
D)the LM curve shifting to the left.
E)none of the above.

Question

Quizplus · Accepted Answer

Stagflation is characterized by high inflation and high unemployment, which cannot be directly explained by shifts in the IS or LM curves alone. These curves represent the goods market and money market equilibrium, respectively, and do not directly account for simultaneous stagnation and inflation.

Stagflation Can Be Explained by