Stagflation occurs when:
A) the inflation rate decreases and current output decreases.
B) the inflation rate increases and current output decreases.
C) the inflation rate decreases and current output increases.
D) the inflation rate increases and current output increases.

Question

Quizplus · Accepted Answer

Stagflation is a situation where the economy experiences both high inflation and low economic growth or output. Therefore, option B, which states that inflation rate increases while current output decreases, is the correct answer.

Stagflation Occurs When