WBCS.LIVE practice question

The term 'Stagflation' refers to an economic situation characterized by?

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

Answer options

  1. High inflation and high growth.
  2. Low inflation and low growth.
  3. High inflation and high unemployment.
  4. Low inflation and low unemployment.

Correct answer and explanation

Correct answer: High inflation and high unemployment.

Explanation: āœ… Correct Answer: C) High inflation and high unemployment. šŸ“š Explanation: Stagflation is a combination of stagnant economic growth, high unemployment, and high inflation. It is a difficult situation for policymakers because actions designed to lower inflation may increase unemployment. It was first widely recognized in the 1970s during the global oil crisis.