Stagflation occurs when high inflation happens during a period of stagnant economic growth and high unemployment. Stagflation presents a challenge to policymakers because the tools used to combat inflation typically raise unemployment and vice versa.

What cases imply stagflation?

Stagflation refers to an economy that is experiencing a simultaneous increase in inflation and stagnation of economic output. Stagflation was first recognized during the 1970s when many developed economies experienced rapid inflation and high unemployment as a result of an oil shock.

What is stagflation quizlet?

stagflation. A period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)