Inflation itself is not a problem generally, it is just that things run away when it increases above a low level. So is stagflation linked to property and equity bubbles which burst and cause an extended depression amongst those that bought property when it was not sensible to do so?
2007-01-18 03:05:33 · 3 answers · asked by James 6 in Social Science ➔ Economics
I'm sorry, but your question is really confusing. It sounds like an essay question to me.
Stagflation is used to describe a period of high price inflation combined with slow output growth, high unemployment, or recession.....not anything to do with "housing bubbles" or anything like that. To put it another way, the "burst" of a housing bubble does not cause stagflation - it's a symptom of the larger problem of unemployment or recession.
2007-01-18 03:17:56 · answer #1 · answered by Johnny 1 · 1⤊ 0⤋
All economies need to grow, but when we have stagflation this does not happen, that is why it appears that property prices are to blame; but they are not. It is the fact that people are out of work and industry has slowed down that is the major cause, all the rest just follows because of the non growth, especially in the manufacturing industry.
2007-01-20 00:55:32 · answer #2 · answered by Social Science Lady 7 · 0⤊ 0⤋
Tsk tsk - is this an essay question for homework?
hm? hmm?
2007-01-18 11:13:06 · answer #3 · answered by Anonymous · 0⤊ 0⤋