Stagflation occurs when the economy's ________ are both high.
A) inflation rate and unemployment rate
B) unemployment rate and growth rate
C) inflation rate and growth rate
D) unemployment rate and deflation rate

Question

Quizplus · Accepted Answer

Stagflation occurs when the economy experiences high inflation rates and high unemployment rates at the same time. This situation is considered to be a rare and difficult economic problem because typical solutions to high inflation (such as increasing interest rates) may exacerbate unemployment, and typical solutions to unemployment (such as increasing government spending) may exacerbate inflation.

Stagflation Occurs When the Economy's ________ Are Both High