Which term is included in stagflation?
Stagflation is characterized by slow economic growth and relatively high unemployment—or economic stagnation—which is at the same time accompanied by rising prices (i.e. inflation). Stagflation can be alternatively defined as a period of inflation combined with a decline in gross domestic product (GDP).
What is stagflation quizlet?
stagflation. A period of slow economic growth and high unemployment (stagnation) while prices rise (inflation)
What are the 3 characteristics of stagflation?
Effects of Stagflation Stagflation results in three things: high inflation, stagnation, and unemployment. In other words, stagflation creates an economy characterized by quickly rising prices and no economic growth (and possibly an economic contraction), which brings about high unemployment.
What is a stagflation example?
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.
Which of the following best describes stagflation?
Which of the following best describes stagflation? A period of high inflation and high unemployment.
What was the result of stagflation quizlet?
High inflation rate, slow economy. Prices increase and people have less money to spend. You just studied 6 terms!
What happens during a stagflation quizlet?
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.
Which one is the cause of stagflation?
Causes of stagflation One contributing factor is a government overprinting currency, increasing the country’s money supply. Another cause is when the central bank creates credit due to its policies. Both actions lead to inflation, due to the increase in money supply.
What is stagflation on a graph?
Stagflation is an economic cycle in which there is high rate of inflation and stagnation. Inflation is when prices of commodities are at an increasing state. As shown in the diagram, the initial level of output was Y1 with a general price level of Y1. The output or total supply curve shifts from AS1 to AS2.
What is difference between stagflation and inflation?
Inflation is the rate at which the price of goods and services in an economy increases. Stagflation refers to an economy that has inflation, a slow or stagnant economic growth rate, and a relatively high unemployment rate. Inflation is natural, expected, and can be managed, while stagflation is avoided at all costs.
What is one consequence of stagflation?
One consequence of stagflation is when the economy drastically slows down as money loses its buying power.
How does stagflation occur?
Stagflation occurs when productive capacity of an economy reduces due to supply side shock. Supply shock is the unfavorable disturbances in the supply chain due to rise in price of goods.
What is stagflation in economics?
In economics, stagflation, or recession-inflation, is a situation in which the inflation rate is high, the economic growth rate slows, and unemployment remains steadily high.
When was stagflation?
Summary and Definition: Stagflation was an economic phenomenon of the 1970’s resulting from a combination of economic stagnation, rising prices and inflation.