Which of the following occurs simultaneously with a higher price level to create stagflation?
A) higher employment
B) economic growth
C) lower aggregate output
D) federal budget deficits

Question

Which of the following occurs simultaneously with a higher price level to create stagflation?  
A) higher employment 
B) economic growth 
C) lower aggregate output 
D) federal budget deficits

Quizplus · Accepted Answer

Stagflation occurs when there is a combination of high inflation and low economic growth or even a decline in aggregate output. Therefore, the correct answer is C, which states that there is a lower aggregate output. The other options - higher employment, economic growth, and federal budget deficits are not necessarily associated with stagflation. In fact, higher employment and economic growth usually lead to lower unemployment and increased output, respectively, which would not cause stagflation. Similarly, federal budget deficits may affect inflation, but they are not directly related to stagflation.

Which of the Following Occurs Simultaneously with a Higher Price