Which of the following statements about stagflation is the most accurate?
A)It is believed to be caused by a leftward shift in the short-run aggregate supply curve.
B)It is believed to be caused by a period of rising prices and higher economic growth.
C)It is characterized by deflation and an expansionary gap.
D)It is characterized by a period of higher economic growth and lower prices.

Question

Quizplus · Accepted Answer

Stagflation is characterized by a combination of high inflation and slow economic growth, which is believed to be caused by a leftward shift in the short-run aggregate supply curve. This can be caused by factors such as supply shocks, such as sudden increases in oil prices or a decrease in productivity. Option B is incorrect because stagflation is characterized by slow economic growth, not higher growth. Option C is also incorrect because stagflation is characterized by high inflation, not deflation. Option D is incorrect because it is the opposite of what stagflation is.

Which of the Following Statements About Stagflation Is the Most