WBCS.LIVE practice question

In macroeconomics, a situation characterized by slow economic growth and relatively high unemployment accompanied by rising prices is known as:

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Inflation
  2. Deflation
  3. Stagflation
  4. Recession

Correct answer and explanation

Correct answer: Stagflation

Explanation: āœ… Correct Answer: C) Stagflation šŸ“š Explanation: Stagflation is a portmanteau of stagnation and inflation. It is a highly difficult economic scenario for policymakers because measures to reduce inflation often increase unemployment, and vice versa. This phenomenon famously occurred globally during the 1970s oil crisis.