At the onset of the 2008 economic slowdown, prices at the grocery stores continued to rise. In some cases, products such as milk and bread almost doubled in price. In March 2008, a Boston newspaper reported, "The price of eggs was up 40% and milk was up 26%." Consumers were already being hit with high energy costs, and now their confidence in the economy was further shaken with job cuts and a loss of discretionary income due to increases in food prices. The economy was slowing, but prices were rising, signifying the potential for .
A)deflation
B)stagflation
C)disinflation
D)equalization

Question

Quizplus · Accepted Answer

Stagflation refers to a situation where the economy is experiencing both slow economic growth and high inflation. This was the case during the 2008 economic slowdown, where the economy was slowing down but prices were still rising at a high rate, causing a loss of confidence in the economy and a decrease in discretionary income for consumers. Deflation refers to a situation where prices are actually decreasing, which was not the case during this period. Disinflation refers to a decrease in the rate of inflation, which was also not happening during this period. Equalization is not a relevant term in this context.

At the Onset of the 2008 Economic Slowdown, Prices at the Grocery