Stagﬂation can be described as a
A) shift right in the aggregate supply curve.
B) shift left in the aggregate supply curve.
C) period of stable prices and high unemployment.
D) period of rising prices and low unemployment.

Question

Quizplus · Accepted Answer

Stagflation is a situation where the economy experiences both high inflation and high unemployment. This is caused by a leftward shift in the aggregate supply curve, which reduces output and increases prices simultaneously. Therefore, the correct answer is B, a shift left in the aggregate supply curve.

Stagﬂation Can Be Described as a