Stagflation occurs when the economy's inflation rate is high and
A) employment is high.
B) the unemployment rate is high.
C) the unemployment rate is low.
D) the rate of change in economic activities is positive.

Question

Quizplus · Accepted Answer

Stagflation occurs when there is a high inflation rate combined with high unemployment. This is a tricky situation as high inflation means that prices of goods and services are going up, while high unemployment means that demand in the economy is low, causing a decrease in production and economic activity. This can lead to a decline in the overall state of the economy.

Stagflation Occurs When the Economy's Inflation Rate Is High and