Define "stagflation" and explain how it can be created
What will be an ideal response?
Stagflation is a combination of two words: stagnation and inflation. Stagnation means real GDP is below the full employment level and falling, that is, the economy is in recession while at the same time the price level is rising, that is, the economy is experiencing inflation. An increase in the price of a major resource that decreases aggregate supply can trigger stagflation.
You might also like to view...
The Philippines and Vietnam have roughly the same size population. Suppose the GDP of the Philippines is $1,000 billion and the GDP of Vietnam is $10,000 billion. You should conclude
A) it is not possible to make a good comparison of the economic well being of a typical individual in the 2 countries without additional information. B) a typical person in Vietnam is 10 times as well off as the typical person in the Philippines. C) a typical person in Vietnam is more than 10 times as well off as the typical person in the Philippines. D) a typical person in Vietnam is less than 10 times as well off as the typical person in the Philippines.
__________ is a payment by the government to exporters to permit them to reduce the selling prices of their goods so they can compete more effectively in foreign markets.
A. Export subsidy B. Import subsidy C. Tariff D. All of these