can ne 1 answer this essay question on stagflation?

Question

The econonmy of a pacific island country is experiencng stagflation; and the country's policy makers are very concerned. Write a short essay explaining the difficulties/dilemma facing these policy makers.

Answer 1

Stagflation is a catch phrase commonly used to refer to stagnant or sluggish general economic conditions together with high price inflation. In an unregulated economy, this should not occur, because increasing prices would create a healthy job market, which would build the economy and increase wages. The challenge to any government is to minimize taxes and regulate as little as possible in order to allow the economy to fluctuate normally.