Stagflation results when high inflation and high unemployment occur simultaneously.

Question

Quizplus · Accepted Answer

Stagflation is a macroeconomic phenomenon in which there is a combination of high inflation and high unemployment. This is a rare and undesirable situation as policies aimed at reducing unemployment, such as expansionary fiscal or monetary policies, can exacerbate inflation, while policies aimed at controlling inflation, such as contractionary policies, can increase unemployment.

Stagflation Results When High Inflation and High Unemployment Occur Simultaneously