"Stagflation" refers to the unwelcome combination of
A)inflation and rising prices.
B)deflation and unemployment.
C)inflation and unemployment.
D)inflation and expansion.

Question

Quizplus · Accepted Answer

Stagflation refers to the combination of high inflation and high unemployment, which are two typically opposing economic conditions. This creates a stagnant economy, with high prices for goods and services but a lack of employment opportunities. Option A, inflation and rising prices, is redundant as inflation itself causes rising prices. Option B, deflation and unemployment, is also incorrect as deflation is the opposite of inflation, and the two cannot occur simultaneously. Option D, inflation and expansion, is not correct as expansion refers to economic growth, which is typically associated with decreasing unemployment rates, making it an unlikely combination with inflation.

"Stagflation" Refers to the Unwelcome Combination of