What is stagflation?
Q: What is stagflation?
A: Stagflation is an economic term used to describe a situation in which there is almost no growth in production, yet there is high inflation and unemployment.
Q: Who coined the term 'stagflation'?
A: The term 'stagflation' was coined by British politician Iain Macleod who became Chancellor of the Exchequer in 1970.
Q: How does stagflation affect economic policy?
A: Stagflation poses a dilemma for economic policy as actions designed to lower inflation may exacerbate unemployment, and vice versa.
Q: What did Keynesian economics say about stagflation?
A: According to Keynesian economics, inflation and recession were regarded as mutually exclusive, with the relationship between them being described by the Phillips curve.
Q: How can stagflation be stopped once it starts?
A: Stopping stagflation once it has started is very costly and difficult. It requires political measures such as increasing investment in companies and reducing prices of goods.
Q: What causes stagflation?
A: Stagflation is caused by a combination of factors including rising costs of production leading to higher prices, fewer items being made resulting in fewer people needed to make them, and cost push factors such as increased wages or taxes leading to higher prices for goods.
