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Question

What are the economic costs of stagflation?

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Answered 9 months ago
Answered 9 months ago

Stagflation is a macroeconomic event where the economy is faced with a stagnated output growth while experiencing higher inflation rates.

The economic costs of such an event are high since the economy has higher unemployment rates and the household's purchasing power is decreased due to the price increase. The most challenging part is that it is really hard for policymakers to fix the problem.

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