In a stagflation situation,what happens to real output and the price level?
A)Real output growth decreases and the price level decreases.
B)Real output growth increases and the price level decreases.
C)Real output growth decreases and the price level increases.
D)Real output growth increases and the price level increases.

Question

Quizplus · Accepted Answer

Stagflation is a situation of high inflation and low economic growth. In this scenario, real output growth decreases due to lower production and higher unemployment, while the price level increases due to rising costs and inflationary pressures. Therefore, the correct choice is C, which states that real output growth decreases and the price level increases.

In a Stagflation Situation,what Happens to Real Output and the Price