Stagflation is the result of
A)an increase in short- run aggregate supply.
B)a decrease in short- run aggregate supply.
C)a decrease in aggregate demand.
D)a decrease in short- run aggregate supply combined with a simultaneous increase in aggregate supply.
E)an increase in aggregate demand.

Question

Quizplus · Accepted Answer

Stagflation is a combination of inflation and stagnation or a slowdown in economic growth. This is caused by a decrease in short-run aggregate supply, which leads to higher prices and lower output. A decrease in aggregate demand alone would simply result in lower prices and output.

Stagflation Is the Result of