The Covid-19 pandemic also represents a supply shock. View FREE Lessons! A) increasing; increasing B) decreasing; decreasing C) increasing; decreasing D) decreasing; increasing 2. The 1970s can be seen as the time when stagflation was first recognized, with many developed economies experiencing rapid inflation and high unemployment due to an oil shock. Define stagflation. Page 1 Chapter 12- Aggregate Demand and Aggregate Supply 1. Detailed Explanation: Stagflation is the miserable combination of rising prices and a stagnant economy, which in turn leads to higher unemployment. In the United States the most famous period during which inflation and unemployment were positively correlated was the 1970s. 1.Stagflation is a combination of: a) increasing unemployment and increasing inflation. https://www.khanacademy.org/.../macro-price-indices-and-inflation/v/stagflation b) decreasing unemployment and decreasing inflation. Also called stagflation, the supply-side inflation represents an unenviable combination of low or negative growth and upward movement in prices. wage and price controls Limits imposed by the government on the amount by which wages and prices can rise, in order to reduce the inflation rate at a given unemployment rate. Stagflation. The stagflation of the 1970s followed two negative oil-supply shocks after the 1973 Yom Kippur war and the 1979 Iranian revolution. Stagflation is a term used to describe an economy that has simultaneously experienced high inflation and low economic output. wage rate The price of labor. The 2021 stagflation—the unhappy combination of rising prices and falling output—is a supply-side phenomenon. Definition of Stagflation: Stagflation occurs when there is inflation accompanied by little or no economic growth. 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