Stagflation is a situation in which an economy experiences high inflation and high unemployment simultaneously. This can be a challenging environment for policymakers to address, as traditional solutions for combating inflation may exacerbate unemployment and vice versa. Stagflation is often a result of a negative supply shock, such as an increase in oil prices or other production disruptions, that reduces economic output and increases prices at the same time.
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Stagflation is a combination of high inflation and high unemployment, resulting in a challenging economic environment for policymakers to address.
