Question

What is stagflation?

Short answer

Stagflation is a condition in which an economy endures both stagnation and inflation.

Step-by-step solution

Stagnation 

Stagflation is the result of the combination of stagnation and inflation.

Stagflation is a condition in which an economy has both stagnation and inflation. This is regarded as a form of economic disruption. Stagnation occurs when an economy's resources are insufficient to increase output. It has reached its full potential.

Stagflation Definition

Inflation is defined as a steady rise in a country's price level.

As a result, stagflation is defined as an increase in price levels without an increase in output level. This condition used to occur in the 1970s, when world oil prices were rising.