Stagflation
Stagflation is an economic phenomenon that occurs when an economy experiences a combination of high inflation and slow economic growth, or stagnation. It is a situation in which the prices of goods and services rise faster than the rate of economic growth, resulting in a decrease in the purchasing power of consumers. Stagflation is a difficult situation for any economy to be in, as it can lead to a decrease in consumer confidence, a decrease in investment, and an increase in unemployment.
History of Stagflation
The term “stagflation” was first coined in the 1970s, when the United States and other countries experienced a period of high inflation and slow economic growth. This period was characterized by high unemployment, high inflation, and low economic growth. The cause of this phenomenon was attributed to a combination of factors, including an increase in the cost of oil, a decrease in the demand for goods and services, and an increase in government spending. This period of stagflation lasted until the early 1980s, when the economy began to recover.
Comparison of Stagflation
| Year | Inflation Rate (%) | GDP Growth (%) |
|---|---|---|
| 1970 | 6.2 | 3.4 |
| 1980 | 13.5 | -0.2 |
| 1990 | 4.2 | 3.0 |
| 2000 | 3.4 | 4.1 |
Summary
Stagflation is an economic phenomenon that occurs when an economy experiences a combination of high inflation and slow economic growth, or stagnation. It is a difficult situation for any economy to be in, as it can lead to a decrease in consumer confidence, a decrease in investment, and an increase in unemployment. To learn more about stagflation, you can visit websites such as the Federal Reserve Bank of St. Louis, the International Monetary Fund, and the World Bank.
See Also
- Inflation
- Deflation
- Monetary Policy
- Fiscal Policy
- Economic Growth
- Unemployment
- Consumer Confidence
- Investment
- Gross Domestic Product
- Balance of Payments
