When there is a general increase in prices in spite of a downturn in the economy, that is called ___Select one:a. Hyperinflationb. Stagflationc. Inflationd. Deflation
Question
When there is a general increase in prices in spite of a downturn in the economy, that is called ___Select one:a. Hyperinflationb. Stagflationc. Inflationd. Deflation
Solution
The correct answer is b. Stagflation. This term is used to describe a situation in the economy where there is a high rate of inflation (increase in prices) along with high unemployment and stagnant demand in the country's economy. This is a rare scenario as inflation and unemployment are typically seen as inversely related.
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