Stagflation occurs when the economy experiences ?
Correct answer: B. rising prices and falling output
- A. rising prices and rising output
- B. rising prices and falling output
- C. falling prices and falling output
- D. falling prices and rising output
Explanation
Stagflation combines economic stagnation with inflation, meaning output falls or stagnates while the price level rises. It is commonly caused by an adverse supply shock.
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The economy is studied as a whole through national income, gross domestic product, inflation, unemployment, economic growth and business cycles. Coverage includes aggregate demand and supply, consumption and investment, money and banking, fiscal and monetary policy, exchange rates and balance of payments, which distinguishes macroeconomics from the study of individual markets.
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