Stagflation occurs when the AD, LRAS, or SRAS curve shifts to the left or right , holding all else constant. This results in a Higher or lower price level, a higher or lower level of real GDP, and a lower or higher unemployment rate.
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This leads to a lower price level, as there is less demand for goods and services, causing businesses to lower their prices to attract customers. Show more…
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Stagflation occurs when there is an increase in unemployment and an increase in inflation. This occurs graphically as a rightward shift of aggregate demand rightward shift of aggregate supply leftward shift of aggregate demand leftward shift of aggregate supply
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