Stagflation occurs when the economy experiences
A) rising prices and rising output.
B) rising prices and falling output.
C) falling prices and falling output.
D) falling prices and rising output.

Question

Quizplus · Accepted Answer

Stagflation occurs when there is a combination of high inflation (rising prices) and low economic growth (falling output). Option A is incorrect because rising output alongside rising prices would indicate healthy economic growth with minor inflation. Option C and Option D contradict the definition of stagflation entirely.

Stagflation Occurs When the Economy Experiences