Stagflation is caused by a leftward shift of the aggregate supply curve.

Question

Quizplus · Accepted Answer

Stagflation occurs when there is a combination of stagnant economic growth and inflation. This can be caused by a leftward shift of the aggregate supply curve, which can occur due to factors such as higher input costs or decreased productivity. As a result, prices increase while the economy experiences reduced output and employment levels, leading to stagflation.

Stagflation Is Caused by a Leftward Shift of the Aggregate