Recovery from a period of stagflation will be
A) longer than recovery from a recession with the same gap between actual and potential GDP and no inflation.
B) almost identical to recovery from a recession with the same gap between actual and potential GDP and no inflation.
C) shorter than recovery from a recession with the same gap between actual and potential GDP and no inflation.
D) any of the above depending on circumstances defined within the domestic economy.
E) any of the above depending on situations that, from the perspective of writing policy, are entirely random and unpredictable.

Question

Quizplus · Accepted Answer

Recovery from stagflation is typically longer because it involves addressing both high inflation and unemployment, requiring careful policy measures to avoid worsening either issue.

Recovery from a Period of Stagflation Will Be