Stagflation is generally caused by:
A)an increase in aggregate demand.
B)a decrease in aggregate demand.
C)an increase in aggregate supply.
D)a decrease in aggregate supply.
E)a low rate of interest.

Question

Quizplus · Accepted Answer

Stagflation is caused by a decrease in aggregate supply, which leads to higher prices (inflation) and lower economic output (stagnation). This often occurs due to supply shocks such as increases in the prices of raw materials, disruptions in production, or changes in government regulations.

Stagflation Is Generally Caused By