Stagflation describes a condition of the economy in which weak growth and the high rate of unemployment - called stagnation - is accompanied by a increase in inflation and by a drop in the Gross Domestic Product.
Stagflation is an economic problem defined both by its rarity and by the lack of consensus among academics on what its exact characteristics are.
Usually, when unemployment is high, spending falls, as do commodity prices. Stagnation occurs when commodity prices rise as unemployment rises and spending falls. Stagflation can prove to be a particularly difficult problem for governments due to the fact that most policies aimed at reducing inflation tend to worsen conditions for the unemployed and policies aimed at reducing unemployment increase inflation .
To learn more: What is stagflation? Is the nightmare of central banks about to return?
