During a period of stagflation, a nation is most likely experiencing which of the following?

• A. Low unemployment and high economic growth
• B. Low inflation and low unemployment
• C. High inflation and high unemployment
• D. High economic growth and low inflation

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the term 'stagflation'. Stagflation is a situation in macroeconomics where an economy experiences stagnant growth, high unemployment, and high inflation simultaneously.
2. Step 2: Recall the typical economic conditions during stagflation: economic growth is low or negative (stagnation), unemployment is high, and inflation is high.
3. Step 3: Analyze each option in the problem by comparing it to the characteristics of stagflation:
4. - 'Low unemployment and high economic growth' contradicts stagflation because unemployment is low and growth is high.
5. - 'Low inflation and low unemployment' contradicts stagflation because inflation is low and unemployment is low.
6. - 'High inflation and high unemployment' matches the definition of stagflation.
7. - 'High economic growth and low inflation' contradicts stagflation because growth is high and inflation is low.
8. Step 4: Conclude that the correct description of stagflation is 'High inflation and high unemployment' based on the economic conditions it entails.