From Stagflation is one of the most common things in the economy but difficult to understand. Stagflation is one of the most confusing things among economic terms. Because two cases are often difficult to see the experience at the same time. This is stagnation and inflation. So what is wrong, why? What is the result of Staglation?
Inflation Stag is a high inflation, low growth and high unemployment environment, where prices are increasing rapidly while the economy is undergoing a stagnant state. Usually, when things slow down in the economy, inflation is expected to decrease. However, in a misleading state, everything is wrong: both public purchasing power decreases and unemployment increases. In other words, the economy is trapped in one type. The cause of the deviation? Supply supply (supply supply): Increasing difficulties in material costs, such as sudden increasing oil prices, cost production. This both increases the price and prevents economic growth. False monetary policy: The honesty of central banks with low interest rates, but the fact that production does not increase at the same time only increases the price. This cannot be developed when creating uncontrolled inflation. Kur Socks and Craip Cranes: The depreciation of domestic currency makes it expensive. As the costs increased, the purchasing power of the public decreased and slowed down. Global economic crisis: With the collapse of external demand, reduced exports and the economy slowed down. Stagflation occurs if inflation increases in the domestic market at the same time. Results of misleading status In a national economy with misleading conditions, there are usually the following; The purchasing power decreases, the unemployment rate increases, investment and production to stops, the economic beliefs are damaged, the society's instability may increase.