Stagflation exists when an economy is experiencing high rates of both unemployment and inflation.

Question

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Stagflation is a situation where there is a simultaneous occurrence of high inflation and high unemployment in an economy. This means that prices are rising rapidly while the number of job opportunities is decreasing or remaining stagnant. In other words, stagflation is a combination of economic conditions that are normally contradictory in nature, but can occur together.

Stagflation Exists When an Economy Is Experiencing High Rates of Both