The term "stagflation" is used to define an economic situation where there are adverse supply shocks which cause a fall in output but with increasing price level.

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Stagflation is a situation where there is a combination of stagnant economic growth and high inflation. It occurs when the economy experiences a supply shock that reduces output, while at the same time, the cost of production increases, leading to higher prices.

The Term "Stagflation" Is Used to Define an Economic Situation