High inflation rate, slow economy. Prices increase and people have less money to spend
. You just studied 6 terms!
What is the result of stagflation?
Stagflation refers to an economy that
is experiencing a simultaneous increase in inflation and stagnation of economic output
. Stagflation was first recognized during the 1970s when many developed economies experienced rapid inflation and high unemployment as a result of an oil shock.
What was stagflation quizlet?
Stagflation describes
a period in which both prices and unemployment are increasing
. Stagflation is a combination of inflation and stagnation, or lack of growth in the economy. Stagflation is always characterized by rising unemployment and prices.
What is stagflation caused by quizlet?
Stagflation is caused by
a shift of the aggregate supply curve to the left
. Core (underlying) rate of inflation. An adjusted measure of inflation (a persistent increase in the average price level in the economy) that removes the distortions of the most volatile prices of items such as food and energy.
What is stagflation stagflation occurs when quizlet?
Stagflation occurs when.
a supply shock shifts the SRAS to the left, increasing the price level and decreasing actual GDP
.
At the new short run equilibrium
, the unemployment rate will. be lower. compared to the unemployment rate at the initial equilibrium, prior to the increase in exports.
How did stagflation affect the economy?
The term “stagflation” was coined in the 1970s, when the United States began
experiencing inflation during a recession
. … The combination of all these economic and regulatory factors led to double-digit inflation rates in 1973 and 1974, and nearly doubled the unemployment rate. Naturally, consumer spending plummeted.
How does stagflation affect the economy?
With stagflation, a country’s citizens are affected by
high rates of inflation and unemployment
. High unemployment rates further contribute to the slowdown of a country’s economy, causing the economic growth rate to fluctuate no more than a single percentage point above or below zero.
What is stagflation a combination of?
Stagflation is a combination of several economic conditions:
slow economic growth (stagnation), high unemployment, and high levels of inflation
. When economic output expands more slowly or shrinks, there are fewer job opportunities.
What was realpolitik quizlet?
Realpolitik is
a politics based on the needs of the state
. … Power was more important than the rule or belief governing one’s personal behavior. Otto Von Bismarck was a master of realpolitik.
What caused stagflation in the 1970s?
Rising oil prices
should have contributed to economic growth. In reality, the 1970s was an era of rising prices and rising unemployment; the periods of poor economic growth could all be explained as the result of the cost-push inflation of high oil prices.
What happens to the economy during stagflation quizlet?
High inflation rate, slow economy. Prices increase and people have less money to spend
. You just studied 6 terms!
What causes stagflation and stagflation?
Stagflation, in this view, is caused by
cost-push inflation
. Cost-push inflation occurs when some force or condition increases the costs of production. … In particular, an adverse shock to aggregate supply, such as an increase in oil prices, can give rise to stagflation.
What was the policy of detente quizlet?
The policy of détente refers to the time
in the 1960s-1970s when the two superpowers eased tension and tried to cooperate to avoid conflict in the Cold War
.
What shock causes stagflation?
A supply shock
can cause stagflation due to a combination of rising prices and falling output. In the short run, an economy-wide positive supply shock will shift the aggregate supply curve rightward, increasing output and decreasing the price level.
What curve shifts to the left when stagflation occurs?
The aggregate supply curve
shifts to the left as the price of key inputs rises, making a combination of lower output, higher unemployment, and higher inflation possible. When an economy experiences stagnant growth and high inflation at the same time it is referred to as stagflation.
Which government policy will shift the aggregate demand curve to the right quizlet?
ex: the federal reserve can lower the cost to firms and households of borrowing by taking actiosn that reduce interest rates.
lower borrowing costs increase consumption and investment spending
, which shift the aggregate demand curve to the right. higher interest rates shift the aggregate demand curve to the left.
