One reason stagflation is difficult to recover from is because:
A) wages are sticky downward.
B) input prices increase with output prices.
C) less output requires less inputs to be hired.
D) prices tend to adjust more quickly downward than upward.

Question

Quizplus · Accepted Answer

Stagflation is characterized by a combination of high inflation and low economic growth, which is referred to as a "sticky" situation. This means that wages and prices are slow to adjust downward, even if the economy is not growing. In other words, prices do not "drop" quickly back to a normal level when the economy is in a stagnant state. This can lead to a vicious cycle of inflation, as businesses and households struggle to keep up with rising prices, which only exacerbates the problem.

One Reason Stagflation Is Difficult to Recover from Is Because