Which of the following would cause stagflation?
A)Aggregate demand shifts right.
B)Aggregate demand shifts left.
C)Aggregate supply shifts right.
D)Aggregate supply shifts left.

Question

Quizplus · Accepted Answer

Stagflation is characterized by slow economic growth and high unemployment (stagnation) along with rising prices (inflation). This scenario is typically caused by a leftward shift in the aggregate supply curve, which indicates a decrease in the overall production capacity of the economy. This decrease in supply can lead to higher prices for goods and services, even in the face of stagnant or declining demand, thus causing stagflation.

Which of the Following Would Cause Stagflation