At the onset of the recent economic slowdown, prices at the grocery stores continued to rise. In some cases, products such as milk and bread almost doubled in price. A Boston newspaper reported, "The price of eggs was up 40% and milk was up 26%." Consumers were already being hit with high energy costs, and now their confidence in the economy was further shaken with job cuts and a loss of discretionary income due to increases in food prices. The economy was slowing, but prices were rising, signifying the potential for ___________.
A) deflation
B) stagflation
C) disinflation
D) equalization

Question

Quizplus · Accepted Answer

The scenario described indicates the potential for stagflation, which is a combination of low economic growth or recession and high inflation.

At the Onset of the Recent Economic Slowdown, Prices at the Grocery