A situation in which output decreases while prices increase is often referred to as:
A) stagflation.
B) inflation.
C) negative economic growth.
D) a recession.

Question

Quizplus · Accepted Answer

Stagflation is a term used to describe a situation where there is a combination of high inflation and low economic growth or output. This means that even though prices are increasing, the economy is not producing as much as it should, leading to a decline in overall output. This type of situation can be particularly challenging for policymakers as traditional tools to combat inflation may not be effective in spurring economic growth.

A Situation in Which Output Decreases While Prices Increase Is