How are aggregate supply and stagflation related?
A)Stagflation usually causes an adverse shift in aggregate supply.
B)An adverse supply shift usually causes stagflation.
C)Stagflation only follows inflation, with no relation to aggregate supply.
D)There is no relationship between the two.

Question

Quizplus · Accepted Answer

Stagflation is typically caused by an adverse supply shock, which shifts the aggregate supply curve to the left, leading to higher prices and lower output.

How Are Aggregate Supply and Stagflation Related