Graphically,what is necessary for an economy to escape the grips of stagflation?
A)Shift the AD curve to the right
B)Shift the AD curve to the left
C)Shift the AS curve to the right
D)Shift the AS curve to the left

Question

Quizplus · Accepted Answer

To escape stagflation, the economy needs to increase its productivity and decrease its costs. This can be achieved by shifting the AS curve to the right, which represents an increase in the economy's potential output and a decrease in the cost of production. Shifting the AD curve can also help, but it may worsen inflationary pressures in the short term. Therefore, option C is the best choice as it addresses the root cause of stagflation.

Graphically,what Is Necessary for an Economy to Escape the Grips