What is stagflation and what was one of its causes in the 1970 and early 1980?
What will be an ideal response?
Stagflation is the presence of both inflation and unemployment over a period of time such as occurred in the 1972–1974 and 1977–1980 periods. The major cause appears to be a series of adverse aggregate supply shocks that shifted the economy’s short-run aggregate supply curve to the left. One of the major shocks was the quadrupling of oil prices by the Organization of Petroleum Exporting Countries (OPEC) that significantly increased energy prices. Other shocks included severe agricultural shortfalls around the world, the depreciation of the dollar, wage and price increases after wage-price controls were removed, and a decline in productivity.
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What is the difference between buying stocks and buying bonds?
A) The future growth of a stock is more uncertain than the payments of a bond. B) Differences of opinion about a stock's future may vary considerably but there is less difference about a bond's future. C) A stock can possibly pay dividends forever, but bonds have a fixed number of payments. D) All of these are differences between stocks and bonds.
Real GDP means GDP:
a. valued at prices in a base year. b. that does not change from year to year. c. corrected for changes in quality. d. valued at prices at which goods are actually sold.