what is stagflation

Stagflation is an economic condition characterized by slow economic growth, high unemployment, and rising prices or inflation. It is a rare occurrence in economics, but it has happened in the past and is a concern for some economists and fund managers. Stagflation is thought to occur when there is an adverse supply shock, such as a disruption in the oil supply or a shortage of essential parts. This can affect all of the factors that make up stagflation: inflation, employment, and economic growth. The term stagflation was first coined during a period of inflation and unemployment in the United Kingdom in the 1960s and 1970s. It is believed to occur when there is a negative shift in an economys aggregate supply curve. Governments and central banks use monetary and fiscal policies to stabilize prices and avoid stagflation, but there is no sure-fire way to get the economy back on track.