Stagflation occurs when the aggregate price level _____ and the aggregate output level _____.
A) falls;falls
B) falls;rises
C) rises;falls
D) rises;rises

Question

Quizplus · Accepted Answer

Stagflation occurs when there is a simultaneous increase in the price level and a decrease in output level. This is because the higher prices lead to decreased purchasing power, causing a decrease in demand and output levels.

Stagflation Occurs When the Aggregate Price Level _____ and the Aggregate