Stagﬂation refers to
A) an increase in inﬂation accompanied by decreases in real output and employment.
B) a decline in the price level accompanied by increases in real output and employment.
C) a simultaneous increase in real output and the price level.
D) a simultaneous reduction in real output and the price level.

Question

Quizplus · Accepted Answer

Stagflation is a condition in which there is a combination of high inflation and low economic growth (reduced real output and employment). Option A best describes stagflation, where there is an increase in inflation accompanied by decreases in real output and employment. Option B, C, and D do not fit the definition of stagflation.

Stagﬂation Refers to