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Stagflation refers to a situation which is characterised by
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- stagnant employment and deflation
- deflation and rising unemployment
- inflation and rising employment.
- inflation and rising unemployment
- stagnant employment and deflation
Correct Option: D
Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.
