The concurrent problems of inflation and unemployment are termed:
A) depression.
B) downturn.
C) deflation.
D) stagflation.

Question

Quizplus · Accepted Answer

Stagflation is the simultaneous occurrence of high inflation and high unemployment, which is a unique and challenging economic occurrence as policies that can reduce inflation may increase unemployment and policies to reduce unemployment may increase inflation. Therefore, stagflation poses a significant challenge for policymakers. Option A (depression) refers to a prolonged economic downturn with high unemployment, low production, and low economic activity. Option B (downturn) refers to a decline in economic activity, which may lead to unemployment but not necessarily in conjunction with inflation. Option C (deflation) refers to a decrease in the general price level of goods and services, which may lead to an increase in unemployment but not necessarily with inflation.

The Concurrent Problems of Inflation and Unemployment Are Termed