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| Q. |
Stagflation refers to a situation which is characterized by - |
| A. | stagnant employment and deflation |
| B. | deflation and rising unemployment |
| C. | inflation and rising employment. |
| D. | inflation and rising unemployment |
| Answer» D. inflation and rising unemployment | |
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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. |
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