The essential feature of the stagflation phase of the inflation-unemployment cycle is

Question

Quizplus · Accepted Answer

Stagflation is characterized by a combination of high inflation and stagnation in economic growth, which results in an increase in the price level but a decrease in real GDP. This is often caused by changes in expectations about the price level, such as when inflation expectations become embedded in the economy and lead to higher prices. Therefore, choice B is the best answer as changes in expectations about the price level are the essential feature of the stagflation phase of the inflation-unemployment cycle.

The Essential Feature of the Stagflation Phase of the Inflation-Unemployment