Q. In the context of an economy, the term Stagflation refers to:

[A] A temporary price rise in certain goods while an economy is in stagnation.

[B] A situation where a country exports are stagnating, leading to inflation.

[C] An economic state where inflation and unemployment are both at high levels simultaneously.

[D] A long period of low aggregate demand in relation to an economy productive capacity.

Answer: C
Notes:

Explanation: Stagflation is defined as A situation in an economy when inflation and unemployment both are at higher levels. This contradicts the conventional belief that there is a trade-off between the two.

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