Stagflation is the combination of
A) falling output and a falling price level
B) falling output and rising unemployment
C) falling output and a rising price level
D) falling output and falling unemployment
E) rising unemployment and a falling price level

Question

Quizplus · Accepted Answer

Stagflation is a condition where the economy experiences both low economic growth (falling output) and high inflation (rising price level) simultaneously. Option A and D contradict the definition of stagflation as they suggest falling unemployment which is not a characteristic of stagflation. Option B indicates falling output and rising unemployment, but there is no mention of inflation, so it does not fit the definition of stagflation. Option E involves rising unemployment and a falling price level, which is deflationary in nature and contradicts the idea of stagflation.

Stagflation Is the Combination of