Stagflation is the combination of high unemployment rates and high inflation. It is a phenomenon where an economy experiences stagnant economic growth, high unemployment rates, and high inflation. This is considered to be a harmful economic situation as it creates a difficult situation for policymakers to address both issues simultaneously.

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Stagflation Is

Question 109

Multiple Choice

Stagflation is:

A) the theory that people's expectations of future inflation are based on their most recent experience.
B) the theory that people form expectations on the basis of all available information.
C) the combination of high unemployment rates and high inflation.
D) the combination of low unemployment rates and low inflation.
E) the combination of high unemployment rates and low inflation.

Correct Answer: