The term stagflation refers to:
A)a simultaneous reduction in output and the price level.
B)a simultaneous increase in output and the price level.
C)a decline in the price level accompanied by increases in real output and employment.
D)an increase in the price level accompanied by decreases in real output and employment.
E)a simultaneous increase in both the trade deficit and the budget deficit.

Question

Quizplus · Accepted Answer

Stagflation is a macroeconomic situation where there is a combination of high inflation and stagnant economic growth, which leads to rising unemployment levels. This means that the price level is increasing (inflation) while real output (GDP) and employment are decreasing, which is described in choice D.

The Term Stagflation Refers To