what do you mean by stagflation?

Question

it is a term related to economy

Answer 1

Stagflation, a portmanteau of the words stagnation and inflation, is a term in macroeconomics used to describe a period of high price inflation combined with slow output growth, high unemployment, or recession. "Stag" refers to a sluggish economy, while "flation" signifies rapidly rising consumer prices.

Stagflation is a problem because most tools for directing the economy, that is fiscal policy and monetary policy can trade off growth for inflation. Either they slow growth to reduce inflationary pressures, or they allow general increases in price to occur while generating output growth. Stagflation creates a policy bind in which efforts to correct one problem can worsen the other. The dilemma in monetary policy is instructive. The bank can make one of two choices, each with negative outcomes. First, the bank can choose to stimulate the economy and create jobs by increasing the money supply (by purchasing government debt), but this risks boosting the pace of inflation. The other choice is to pursue a tight monetary policy (reducting government debt purchases in order to raise interest rates) to reduce inflation, at the risk of higher unemployment and slower output growth.

The problem for fiscal policy is far less clear. Both revenues and expenditures tend to rise with inflation, all else equal, while they fall as growth slows. Unless there is a differential impact on either revenues or spending due to stagflation, the impact of stagflation on the budget balance is not altogether clear. As a policy matter, there is one school of thought that the best policy mix is one in which government stimulates growth through increased spending or reduced taxes while the central bank fights inflation through higher interest rates. In reality coordinating fiscal and monetary policy is not an easy task.

Answer 2

Stagflation, a portmanteau of the words stagnation and inflation, is a term in macroeconomics used to describe a period of high price inflation combined with slow output growth, high unemployment, or recession. "Stag" refers to a sluggish economy, while "flation" signifies rapidly rising consumer prices.

Answer 3

Stagflation is an economic dilemma where high price inflation accompanied with slow industrial growth. In these period unemployment rate is very high.

Answer 4

Stag" refers to a sluggish economy, while "flation" signifies rapidly rising consumer prices.Stagflation is a problem because most tools for directing the economy, that is fiscal policy and monetary policy can trade off growth for inflation. Either they slow growth to reduce inflationary pressures, or they allow general increases in price to occur while generating output growth. Stagflation creates a policy bind in which efforts to correct one problem can worsen the other. The dilemma in monetary policy is instructive. The bank can make one of two choices, each with negative outcomes. First, the bank can choose to stimulate the economy and create jobs by increasing the money supply (by purchasing government debt), but this risks boosting the pace of inflation. The other choice is to pursue a tight monetary policy (reducting government debt purchases in order to raise interest rates) to reduce inflation, at the risk of higher unemployment and slower output growth

Theories of stagflation

Neo-classical theory
In neo-classical economic theory, stagflation is rooted in the failure of the overall market to allocate goods and services efficiently. The root cause of this is generally thought to be excessive government regulation. In this view the solution is adjustment - use monetary policy to crush inflationary pressures, and deregulate to force economic activity to more effectively reflect supply and demand. The monetary leg of this "disinflationary" neo-classical policy was pursued in the USA by Paul Volcker starting in 1979, and late in the Carter Administration. Some elements of this policy were maintained in the Reagan Administration. Neo-classical theory also prescribes increasing consumption taxes, in order to encourage saving over spending.


Shock theory
One set of theories argue that stagflation occurs because of outside forces to an economy or "exogenous" factors. In this view stagflation is thought to occur when there is an adverse shock (a sudden increase, for example in the price of oil), in a country's aggregate supply curve. This is another way of saying that a cost which cannot be easily avoided, that is "substituted" in economic terms, rises dramatically, even though demand has not increased.


Quality of money theories
Modern monetary economics assumes that a crucial role for central banks in maintaining stable prices is management of inflationary expectations. If central banks are seen to pursue growth at the cost of higher inflation, economic factors may conclude that the central bank will continue to allow high inflation, and so demand higher prices for their products and higher wages for their labor. Inflation can thus become imbedded through self-fulfilling inflationary expectations. One school of thought is that inflation targeting and other forms of limited central bank discretion are the best way to maintain low inflationary expectations. The Federal Reserve in the US has, however, managed to drive inflationary expectations to a quite low level while maintaining broad policy discretion. These theories are often combined with "quantity" theories of money supply, though not always.


Quantity theories of stagflation
Quantity theories of inflation, such as monetarism, argue that inflation is due to the money supply rather than demand and predict that inflation can occur with high unemployment if the government increases the money supply in a period of rising prices.

Answer 5

when there is rise in prices it is said as inflation thn whn the prices stops increasing or decreasing n stays the same it is called stagflation

Answer 6

Your supporting facts to this ignorant rant are what? Then show facts that support any effort by Obama that has created jobs in the private sector, given the fact that it is not the job of the federal government to create jobs in the private sector. What prosperity has Obama and the Democrats brought to this country since 2008 or even before 2008 when they controlled both houses of congress?