What is stagflation means?

Answer 1

Stagflation is when the domestic economy of a country fails to grow but prices rise anyway. ("stagnation" with "inflation") Definition

Inflation & Deflation are two major vices of capitalistic economy. In inflation too much money chasing too few goods, whereas, in deflation too much over production is observed. The term Stagflation refers to the situation where the prices & level of unemployment increase continuously and the result is very slow economic growth. Definition: Stagflation is an economic situation where there is a coupling of sluggish economic growth, high inflation rate and often unemployment.

In Economic terms:

Stagflation = Stagnation + Inflation Stagflation describes the combination of slow economic growth and high rate of unemployment along with continues rise in prices. Stagflation occurs when the economy isn't growing but prices are. There is no consensus on reasons for stagflation. Few economists believe that it is excessive government regulation leads to it while some others feel high commodity prices leads to it. Irrespective of the cause, stagflation is extremely hard to correct due to its contradictory nature and hard to ride out. Stagflation has most swear effects on consumers as goods and services become expensive and unemployment robs them of income. To add to their misery procuring loans maybe difficult as the Central Bank may restrict credit to combat stagflation. According to Barron: "STAGFLATION term was coined by economists in the 1970s to describe the unprecedented combination of slow economic growth and high unemployment (stagnation) with rising prices (inflation). The principal factor was the four-fold: 1) raise in General Price Level 2) Increase in Unemployment Level 3) Fall in Domestic Gross Production 4) Poor Economic Growth In the situation of Stagflation the continuous raise in price level is observed. Consumer faces burden & the producers earns extraordinary profits. They respond by enhancing their products to earn the maximum profits. Interest rate has raised in such situation hence the fiscal and monetary policies aimed at stimulating the economy and only exacerbated the inflationary effects. Hence the situation has created a hard dilemma for the central banks. They attempt to head off inflation or address slowing the growth rate. The central banks usually raise the level of reserve ratio, bank rate & rate of interest etc so that the increase of prices can be checked. By: Shafaq Chohan\

the combination of high inflation and high unemployment

Answer 2

It's when the economy faces both the problems of inflation and unemployment

Answer 3

Rising inflation combined with a stagnant economy.

Answer 4

the combination of high inflation and high unemployment