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stagflation- lower output and higher price. is caused by what

stagflation- lower output and higher price. is caused by what
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Answer #1

stagflation- lower output and higher price. is caused by supply-side shock

A supply shock can cause stagflation due to a combination of rising prices and falling output.

In the short term, a positive supply shock through the economy would change the aggregate supply curve to the right, raising production and rising price level. A positive supply shock may be a technological advance (a technological shock) that makes production more effective, thus increasing the performance.

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