Answer: rate of growth is slower than the rate of price increase
Notes: Stagflation is a situation in which the rate of inflation is high, the rate of economic growth slows down and unemployment remains consistently high. Stagflation occurs when the economy is not growing but prices are. This largely happened during the 1970s, when world oil prices increased dramatically, leading to sharp inflation in developed countries. For these countries, the stagnation exacerbated the effects of inflation.
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