Stagflation usually results from
A)a supply shock.
B)a decrease in aggregate demand.
C)an increase in aggregate supply.
D)an increase in aggregate demand.
E)an increase in the capital stock.

Question

Quizplus · Accepted Answer

Stagflation is a condition where there is a high rate of inflation accompanied by a slow economic growth rate and high unemployment. This condition typically results from a significant supply shock, which disrupts the normal functioning of markets, and leads to reduced supply and increased prices. Supply shocks can be caused by several factors, including natural disasters, wars, and changes in government policies. Hence, A is the correct answer.

Stagflation Usually Results from