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Chapter 11: 29 (page 292)

What is stagflation?

Short Answer

Expert verified

Stagflation is a condition in which an economy endures both stagnation and inflation.

Step by step solution

01

Stagnation 

Stagflation is the result of the combination of stagnation and inflation.

Stagflation is a condition in which an economy has both stagnation and inflation. This is regarded as a form of economic disruption. Stagnation occurs when an economy's resources are insufficient to increase output. It has reached its full potential.

02

Stagflation Definition

Inflation is defined as a steady rise in a country's price level.

As a result, stagflation is defined as an increase in price levels without an increase in output level. This condition used to occur in the 1970s, when world oil prices were rising.

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