Stagflation refers to a situation which is characterised by

Options

A. stagnant employment and deflation
B. deflation and rising unemployment
C. Inflation and rising employment.
D. inflation and rising unemployment

Answer

D

Explanation

Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower Inflation may exacerbate unemployment, and vice versa.