Definition of stagflation : persistent inflation combined with stagnant consumer demand and relatively high unemployment.
For example, if there's a sudden, unexpected increase in the price of a commodity like oil, prices surge accordingly while profits drop. The conflict between increased prices and reduced profits leads to a stagflation situation.
Stagflation describes a period in which both prices and unemployment are increasing. Stagflation is a combination of inflation and stagnation, or lack of growth in the economy. Stagflation is always characterized by rising unemployment and prices.
Stagflation is caused by a shift of the aggregate supply curve to the left. An adjusted measure of inflation (a persistent increase in the average price level in the economy) that removes the distortions of the most volatile prices of items such as food and energy.
Inflation accompanied by stagnant growth, unemployment or recession. recession. slump. stagnation. downturn.
Terms in this set (25) stagflation. when economic stagnation and high inflation occur together; prices increase and output decreases; renders most policy tools impotent since policies used to fight inflation may cause stagnation or decline and vice versa. misery index. unemployment rate and inflation rate added ...
Stagflation is a term used to describe high rates of inflation (rising prices) coupled with an economic slowdown (stagnant economy, or low demand) and persistent high rates of unemployment – the economic phenomena definitive of the late 1960s and early 1970s.
High inflation rate, slow economy. Prices increase and people have less money to spend. You just studied 6 terms!