Question

The economic condition of "stagflation" of the early 1970s can best be described as __________________.

• A. deflation and low productivity.
• B. high productivity and high prices.
• C. high inflation and high unemployment.
• D. high prices and low productivity.
• E. low prices and high productivity.

Answer 1

The correct option is C high inflation and high unemployment.

The economic condition of "stagflation" of the early 1970s can best be described as high inflation and high unemployment. Stagflation was used to describe the period when the United States faced a prolonged slump and high unemployment along with rising inflation. According to Keynesian philosophy, inflation should have an inverse relationship with unemployment, and an affirmative relationship with economic growth.