ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The term ‘stagflation’ is used in economics to describe 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.

Detailed explanation-2: -Stagflation is the simultaneous appearance in an economy of slow growth, high unemployment, and rising prices. Once thought by economists to be impossible, stagflation has occurred repeatedly in the developed world since the 1970s.

Detailed explanation-3: -In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high.

Detailed explanation-4: -Stagflation occurs when high inflation happens during a period of stagnant economic growth and high unemployment. Stagflation presents a challenge to policymakers because the tools used to combat inflation typically raise unemployment and vice versa.