Category: Inflation
Stagflation
Stagflation is a term which is formed by joining the words stagnation and inflation. It is a newly developed term which is used in modern macroeconomics to give a description of a period of uncontrollable price inflation combined with sluggish output growth. Stagflation raises unemployment.
A central bank decelerates growth to bring down inflationary pressures or sometimes allows to raise the price for hastening the growth. The dilemma is that adjusting stagnation can worsen inflation and vice versa.
